Source: Wall Street Journal By Lorraine Luk
TAIPEI—Contract manufacturer Foxconn Technology Group, which counts Apple Inc. and Sony Corp. as major customers, will build a fifth factory in Brazil, whose tax breaks and proximity to fast-growing markets are making it an attractive alternative to China.
Foxconn, the parent of Hon Hai Precision Industry Co., first invested in Brazil, the largest country in Latin America, only last year. While founder Terry Gou had said earlier that China would remain the company’s major production base for the foreseeable future—80% of its workforce is there—analysts said rising labor costs and taxes have led companies like Foxconn to reassess growth opportunities there.
Taipei-based Foxconn said in a statement Wednesday it has earmarked one billion Brazilian reals (US$ 492 million) for the new facility in São Paulo, which will produce smartphones, tablets and other electronic devices. The plant will start operations in 2014 and reach full capacity in 2016, employing 10,000 workers, the company added.
It didn’t specify which customers the new factory will produce for.
Brazil has been aggressively courting overseas manufacturers, last year cutting federal and state taxes on the production of tablet computers, which could reduce costs by up to 30%. Since then, Foxconn has built four plants in Brazil, mostly to make tablets. Acer Inc., a Taiwanese personal-computer maker, has also expanded its assembly line in the country.