Foxconn’s $12bn Brazil Expansion in Jeopardy

It was back in April when we reported that both Apple and Foxconn willing to invest $12 billion in Brazil to built iPad manufacturing plant. The project was supposed to start production in November. Although, it has been five or six months when this report surfaced, no considerable progress was observed yet as both the Foxconn and Brazilian government are still in negotiations.

Reuters reported earlier today that Foxconn’s new iPad manufacturing plant in Brazil likely be in danger because of company’s unwise demands regarding tax breaks, lack of a skilled workforce and planning and execution of essential infrastructure. According to government officials, it is not clear at the moment whether the project will ever get in right direction.

One of the official remarks, “The talks have been very difficult, and the project for a Brazilian iPad is in doubt. (Foxconn) is making crazy demands” for tax breaks and other special treatment.”

Aloizio Mercadante, the Brazilian Minister of Science and Technology went on to say that the intended $12 billion investment under these circumstances may become less than what actually expected. There is an alternate option for Foxconn as well that they continue to assemble iPad in Brazil by importing parts from other plants rather than assembling here on the site.

“One option could be for Foxconn or a Brazilian partner to simply assemble foreign-made parts to the iPad, rather than producing screens and other components locally. Other steps could also be taken to reduce the project’s scale, which may simply have been too ambitious for all parties.”

When the project was announced back in April, it was thought that the production will commence from July, but it has pushed to November because both the parties failed to reach an agreement until this time. Aloizio Mercandante made a statement on September 14th that the new Foxconn plant in Jundiai, near Sao Paulo, Brazil will launch its first iPad by December. However, it seems extremely unlikely to have an iPad assembled at Foxconn’s new plant by the end of this year under prevailing conditions.

Mercandante explains this as:

“The negotiation is rather complex. The situation for structure, technology, energy, logistics, it’s all very complex.”

We can only hope for betterment of both sides.

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