Reuters reports that Foxconn, the Taiwanese electronics giant that produces iPods, iPhones and iPads in China, is in ongoing talks to invest US$12 billion in building manufacturing facilities in Brazil.
Dilma Rousseff, the Brazilian president, reportedly said that this is under consideration, and she has said that she considers tablet computing as a viable option to inexpensively bring the internet to the lower-middle class of Brazil (around 80 million people). However, a rough translation from Digital&Midia suggests that it's a done deal and that iPads will be coming out of Brazil by the end of November. That report should be taken with a large grain of salt. We don't have a Portuguese speaker in the house, unfortunately, so we'd welcome a more direct translation.
It's easy to spot some pitfalls in Brazil for Foxconn. The manufacturer is in the business of finding the cheapest cost of production; Brazil has one of the highest import tariffs in South America and is considered to be quite an expensive place to do business, due to such factors as heavy taxes, poor labor laws and a possibly overvalued currency. So at first blush, Foxconn doing business in Brazil doesn't seem to make sense.
On the other hand, if it were to happen, import tariffs would be avoided, allowing Apple to step into the highly taxed Brazilian market at lower cost. Right now the cheapest iPad in Brazil sells for $860 while the US price of the lowest end iPad 2 is $499. If iPads were manufactured in Brazil, the selling cost would drop locally and in neighboring South American countries.
So will it happen? Talks have been progressing for three months according to Aloizio Mercadante, who serves as Brazil's Science and Technology minister, and there are ongoing negotiations with other technology manufacturing companies at the same time. This leads us to question the Digital&Midia story saying that a deal has been struck. We'll be keeping an eye to the south for more news soon.