Brazilian bank could pull funding for Foxconn tablet factory

Brazil’s national development bank, BNDES, could withdraw support for Foxconn’s efforts to start iPad production in the country, reports say. Contrary to earlier reports Foxconn has yet to actually begin production in Brazil, although the country’s president, Dilma Rousseff, has previously suggested that tablets could roll off the assembly line by the end of the year. Talks are stalling, a local publication claims.

The problem is that Foxconn has made an assortment of demands to bring production to Brazil, among them government financing. That money would have to come through BNDES. The Brazilian government has promised to find private investors as well, but earlier this week science and technology minister Aloizio Mercadante admitted that Brazilian firms don’t have cash to support the project. Foxconn is also in a weaker bargaining position, since some 24 other companies are said to be interested in building tablets in Brazil. These include Positive, Envision, Motorola, Samsung, LG, Itautec, Samna, Compalead, Semp Toshiba, Aiox and MXT.

Foxconn is even said to be missing permission to actually start production, although if it is granted, it could potentially lower the Brazilian retail prices of tablets by as much as 40 percent. A key demand the company will have to meet is ensuring that 50 percent of LCD production is handled locally by 2014. Along these lines, Mercadante explains that negotiations with Foxconn are focused on two facilities: the first is a Jundiaí plant to make iPads and iPhones, while a second would churn out LCDs for many different electronics, not just phones and tablets.