updated 04:40 am EDT, Sun March 20, 2011
Foxconn known to be investigating expansion
The South American-based Bom Dia news outlet is reporting that China’s Foxconn may build a factory for Apple products in Brazil. Foxconn already has two assembly lines in Jundiai, Brazil that produce products for HP and Sony. Foxconn is known to have commissioned studies investigating the feasibility of adding a third line at its plant. The speculation in the Brazilian press is that this would be dedicated to manufacturing products for Apple.
Apple’s press office responded to enquiries by stating that, “the company does comment on speculation.” When asked for comment, Foxconn did not deny that it was looking at building a third production line, but that it did not have an official position on manufacturing Apple products in Brazil, as it already does for the company in China.
JMP Securities analyst Alex Gauna recently suggested that Foxconn’s production capacity in China could be responsible for holding the Apple back. However, Oppenheimer analyst Yair Reiner refuted that position stating that Apple only generated about $20 billion of Foxconn’s total $93.4 billion in revenue. As such, Apple accounts for a “relatively modest portion” of its total revenue.
Nonetheless, Apple is reported to be struggling meet demand for the iPad 2 and has recently pushed back the launch of the iPad 2 in the Czech Republic from its original launch date of March 25 to April 25. The addition of a third production line in Brazil could help Apple better meet demand for its products, while also allowing Foxconn to maintain its commitments to its other clients.