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Hon Hai Buys Site in Brazil to Expand Manufacturing

11/16/2012 | 06:44am US/Eastern
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--Hon Hai buys site near San Paulo, Brazil for expansion

--A new factory is estimated to start in 2014; reach full capacity in 2016

--The company has long-term plans in the country

(Add purchase details of the purchase and background)

 
   By Jenny W. Hsu 
 

TAIPEI--Hon Hai Precision Industry Co. (>> Hon Hai Precision Industry Co., Ltd.), an assembler of Apple (>> Apple Inc.) products, said Friday it will build a factory on land it bought near San Paulo that, when complete, will centralize its existing factories in Brazil.

It may build additional factories on the site as demand dictates, it said.

Taipei-based Hon Hai, the world's biggest contract electronics manufacturer by revenue, has four factories in Brazil now.

It has plants dotted across China, too. However, rising labor costs there have prompted the company to look elsewhere. It is considering a joint-venture in Indonesia but says details are being ironed out.

Hon Hai purchased the 1.42 million-square-foot plot in an industrial park in Itu, a city near Sao Paulo, Brazil, from Toulouse Incorporacao SPE LTDA for $12.7 million, according to an high ranking company official.

"The procurement signals our interest for a long-term development in Brazil", the official said.

In September, Hon Hai said the facility should open in 2014 and reach capacity in 2016. It will employ approximately 10,000 workers, it added.

It didn't specify what the factory will produce or who for.

Government tax breaks and proximity to growing local markets has made Brazil an attractive alternative to China.

The country has been courting multinationals. Last year, it cut federal and state taxes on the domestic production of tablet computers. This will trim costs by up to 30%. Since then, Hon Hai has built four plants there--most for tablets.

Acer Inc. (>> Acer Incorporated), a Taiwan-based personal-computer maker, has expanded to Brazil.

Write to Jenny W. Hsu at jenny.hsu@dowjones.com

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