LONDON – A plan for the giant manufacturing services provider Foxconn to make Apple iPad tablet computers in Brazil is "in doubt" according to a Reuters report that referenced unnamed government sources. The problem is "stagnant" negotiations over tax breaks for Foxconn and structural problems within Brazil, Reuters said again quoting government sources.
This is despite earlier reports that quoted Aloizio Mercadante, Brazilian Minister of Science, Technology and Innovation, saying that the first "Made in Brazil" iPads would be in the market place by December.
In April, Brazilian President Dilma Rousseff announced Foxconn was in talks with the government about spending up to $12 billion over five or six years to set up in Brazil. However, since then the start date for production of iPads has slipped from July to November prompting Mercadante's comment that the iPad's would arrive in December. Now it appears that project may not progress at all.
"The talks have been very difficult, and the project for a Brazilian iPad is in doubt," Reuters quoted an unnamed government source as saying. Reuters said the source added that Foxconn was making "crazy demands" for tax breaks and other concessions.
One of the problems with the plan is that the Brazilian government is insisting that Foxconn works with local partners but Foxconn claims the local partners do not have the technical capability, the workforce or the finances to scale up for such projects. Foxconn is also demanding priority treatment for incoming components from the Brazilian customs service, which is notoriously slow.
As a result the project may be scaled back from the $12 billion mentioned by President Rousseff in April and Foxconn or a Brazilian partner may be allowed to assemble foreign-made parts rather than being required to source a percentage of components locally, the report said.
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