Brazilian President Dilma Rousseff said Foxconn Technology Group may spend $12 billion over five to six years to expand production in the country, in what would be the Taiwanese company’s biggest investment overseas.
The maker of Apple Inc. (AAPL)’s iPhone and Dell Inc. (DELL) computers is holding talks with the government, the Brazilian president told reporters in Beijing yesterday. Foxconn is giving “serious consideration” to further investment in the South American country and has yet to decide on details, said Louis Woo, a spokesman for the Taipei-based company, declining to comment on the value.
“It makes sense to move to Brazil but that figure is too much,” said Vincent Chen, an analyst at Yuanta Securities Co. in Taipei. “The main reasons to go there are for tariff considerations and to be closer to emerging markets.”
The amount is likely an exaggeration, Chen said.
The expansion may help the Taiwanese company, which employs more than 1 million people in China, scale back its reliance on its manufacturing base in the southern Chinese city of Shenzhen, where wages are climbing. LG Electronics Inc. (066570) and Motorola Mobility Holdings Inc. have also announced plans to manufacture in South America’s largest economy.
Foxconn, whose Brazilian facilities include production of notebooks for Hewlett-Packard Co. (HPQ), would make the investments in order to follow customers and give it “market access,” Woo said. He declined to comment on what products the company would make in Brazil.
As of Sept. 30, Foxconn’s Taipei-based flagship Hon Hai Precision Industry Co. and its affiliates had received approval from Taiwan authorities to invest NT$134 billion ($4.6 billion) in China since the company’s founding in 1974, according to filings to the Taiwan Stock Exchange.
Hon Hai climbed 1 percent to NT$106.50 at the 1:30 p.m. close of trade in Taipei, while the benchmark Taiex index added 0.6 percent.
Foxconn’s proposed facility could create 100,000 jobs, Brazil’s Science and Technology Minister Aloizio Mercadante said in Beijing. Foxconn is seeking state infrastructure guarantees such as energy supply, broadband Internet and access to airports, he said. The plant would produce tablets, he said.
Foxconn has operated in Brazil since 2005, building five factories that employ 4,300 people, according to an official who declined to be named because of company policy. Hon Hai’s worldwide capital spending last year through September came to NT$43.9 billion, about one-eighth of the announced investment in Brazil. The entire Brazilian electronics sector currently employs 175,000, according to the Brazilian Electric and Electronic Industry Association.
LG, the world’s third-biggest handset maker, plans to start production of its Optimus Pad in Taubate, Sao Paulo state, by the second half of this year, according to Mariana Geraldine, a spokesman for the company.
Motorola Mobility plans to take advantage of tax breaks in Brazil to produce its Xoom tablets at a factory in Jaguariuna, Sao Paulo state. It’s waiting for details on the incentives, Motorola said in an e-mailed statement yesterday.
Brazil plans to give tax incentives to manufacturers of tablets to make Latin America’s biggest economy a production center, according to Development Minister Fernando Pimentel. The government also plans to give tablets to students at public schools to modernize Brazil’s education system.
MXT, a Brazilian electronics producer based in Betim, Minas Gerais state, in February started to manufacture the first domestic tablet and plans to expand production after the tax incentives take effect, Etiene Guerra, the company’s CEO, said in an e-mailed interview.
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