iPad to be Made in Brazil by Foxconn

By Sarah de Sainte Croix, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The Taiwanese technology group Foxconn has announced that it will start producing iPads in Brazil by November this year. It already has five production facilities in Brazil, and has said it will invest R$12 billion in the production of computer displays in the country over the next five years.

The news follows President Dilma Rousseff’s decision in May this year to pass a provisional measure to include tablet PCs in the Programa de Inclusão Digital (Digital Inclusion Program) – a program which reduces sales taxes levied on computer equipment with the aim of improving digital access in Brazil.

The Ministries of Finance, Science and Technology and Economic Development who proposed the measure explain that “Tablet PCs have been used increasingly for personal, professional and educational ends, as an important tool for increasing the productivity of businesses, for the diffusion of information and knowledge – all indispensable elements to the insertion of the country into the global economy, to augment it’s competitiveness, and therefore, it’s sustainable development.”

They go on to clarify that “Only those tablet PCs produced in the country…will be eligible for the benefits, and given the size of our internal market and the prospects for growth, this implies a considerable incentive for the attraction of manufacturing industries for this product to the country, with the consequent generation of employment and revenue.”

Indeed, Foxconn’s latest announcement brings with it the promise of 100,000 new jobs, at least 20,000 of which are expected to be engineering posts. Aloizio Mercadante, the Minister for Science and Technology, said, “This will be the foreign investment which has generated the most jobs in the history of this country.”

On top of this, experts are predicting a thirty to forty percent decrease in the shelf price of computers produced in Brazil. This is good news for Brazilian consumers who, according to a recent survey by O Globo, currently pay up to 166 percent more for computer equipment than the equivalent in the United States.

Marcelo Valença Ramos, a Brazilian lawyer and tax specialist, explained, “It is expected that the taxes that have been reduced were responsible for around thirty percent of the price of this kind of equipment.”

Other contributing factors include relatively high labor costs at the point of assembly (compared to countries like Taiwan where the price of labor is around five times lower) and the high taxes and logistical expenses involved with the importation of components produced outside of Brazil.

One American expatriate commented, “It kills me to buy electronic goods over here when I know I could buy a better product much cheaper in the U.S., I prefer to wait until I go back home and buy things there than to pay over the odds here…[the Foxconn announcement] can only be a good thing.”

Foxconn manufactures electronic components for some of the biggest names in the industry including Microsoft, Nokia, Nintendo, Hewlett-Packard and Amazon, besides Apple. It has factories in China, Mexico, Eastern Europe, India and Brazil – and in China alone it has over 400,000 employees. In 2009 it’s turnover reached US$61.5 billion.