Brazil’s $12 Billion iPad Deal Is “In Doubt”

According to Reuters, the $12 billion deal between Brazil and Foxconn to produce Apple’s iPad in a new Brazil-based Foxconn factory is now in doubt. It seems that negotiations between Brazilian government and the iPad-manufacturer have temporarily stalled. The main reasons are high taxes and lack of skilled workers that meet Faxconn expectations.

"We’re dealing with a lot of issues, like the (Taiwanese) trying to figure out how to do business in Brazil … and Brazil figuring out how to produce these complicated products,” a second government official told Reuters. Maybe we will end up starting with something smaller.

Start of production was already put off twice. We see that it still unclear whether the company will manufacture any Apple tablets in this country. As far as we know, Foxconn would like to build a new industrial complex with its own energy system, roads and infrastructure outside Sao Paolo. But the situation is complicated by the fact that the Brazilian government is now engaged in building more profitable $1 trillion projects related to the World Cup and the Summer Olympics the country will host in 2014 and 2016. The other problem includes lack of companies to partner with Foxconn in order to share costs in Brazil.

It’s a requirement to have Brazilian partners, (but) in the technology area the partners we have do not have the financial muscle for investments near that value.