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Is Apple Moving iPad Production to Brazil?
zacharye writes "According to JP Morgan analysts Mark Moskowitz and Gokul Hariharan, Apple lowered fourth-quarter iPad orders 25%, the first time there has been a production decrease. This decrease has led some to speculate that the move is more than a response to lower demand, or a wish to operate with reduced inventory. Some insiders see this as a move in production from China to Brazil."
Brazil has the worst tariffs on imports. If Apple has decided that the Brazil market for iPads is large enough, it makes sense to move production there to avoid the tariffs.
Yes it is, it means Son of Garlic Mayonnaise.
China = A hoarde of communist slaves working away in terrible conditions with one aim: World domination for the Chinese Communist Party and its authoritarian ways. Terrible human rights situation, censorship, people generally not allowed to do as they please by the government, most companies actually owned by the CCP, corruption, most of the women are either bitches or brainwashed into doing all they can to help Hu Jintao
Brazil = Party all the time, hawt women everywhere, everybody is too busy having fun and consuming liquids with a high concentration of ethanol to be too serious about such evil things as world domination, a generally happy and stress-free bunch of lads.
I wish really that the jobs could be kept in the US because all this outsourcing has brought quite a lot of poverty to the place and the real cost is in the resulting unemployable underclass the US now has to support. You couldn't just kill them all but that would be the Chinese solution for it (or prevent them from having more than 1 child unless they can afford the fine for having a second child)
This may just be Hon Hai deciding to move some production capacity. Hon Hai makes the products, remember. Apple is a "hollowed out" company, with no manufacturing capability.
Historically, that's the beginning of the end. The day may come when Apple is just a brand name licensed to real manufacturers. That's what Westinghouse and RCA, once major companies, are now.
They'll be produced by the brazilians!
So based on rumors, JP Morgan analysts lowered production forecasts which leads to speculation that iPad is moving production to Brazil. I don't know if I would place much stock in these analyst forecasts. They're almost never right. When the iPad 2 first came out some analysts forecasted really high numbers like 8M the first quarter only to downgrade them later. Their reasoning was since the iPad 1 sold about 7M the previous quarter, the iPad 2 should outsell it. Well the analysts did think that the previous quarter being the holidays or that it might take time to ramp up production for a new product were factors.
Right now it's only rumors that Apple has cut orders to their existing suppliers. It may not be true. Even if it were true, if Apple has done so to bring on more suppliers nothing says those new suppliers are Brazilian. It might be that Apple is simply bringing on other Asian suppliers. Some people are speculating that this means the iPad 3 will launch soon. I would think it is more likely that Apple has cut orders because they are about to launch the iPhone 5 (or whatever it is called) and the iPad 2 shares more of the same components with the iPhone 4.
Well, there's spam egg sausage and spam, that's not got much spam in it.
There are companies that don't manufacture, but still do real work. nVidia is a great example. They don't fab their chips, TSMC does. They also don't build the cards (other than reference boards for OEMs to look at) OEM partners like eVGA do. However they make a lot of money and it isn't off of patent trolling or something. What they do is design the chips. They have shitloads of R&D and simulation and so on and their engineers design the chips, write the drivers, and so on. That they don't own the facilities to make them is of no real consequence. It isn't like someone else could just up and make a graphics chip with no effort. The R&D is as hard or harder than the manufacturing.
Not saying that is quite the same for Apple, just saying that you don't have to be a manufacturer to be doing something worthwhile.
That would be Aloizio Mercadante. "Aolizio" is not even a name.
Aloizio appears to be the Portuguese counterpart to Latin Aloysius, the little-known given name of a famous fictional mammoth, and its German counterpart is Alois, as in Adolf Hitler's father. (Godwin!) I'm not familiar with Brazilian politics (it takes a brazillion brain cells just to keep up with the politics of my own country), but I could see "Aolizio" as an attempt to put down Mercadante by tying him to some undesirable aspect of AOL.
Producing stuff in Brazil might be a bit more expensive in the short term, but they're a lot less likely to steal all of your R&D and sell it to your competitor.
Brazil just reduced taxes for tablets produced within the country. Apple may or may not be moving its production to Brazil, but it is certainly interesting that this speculation come right after this Brazilian gov't move. Also, there is Mercosul, which is an area of (almost) free commerce in South America that has Brazil, Argentina, Uruguay, Paraguay and Chile as members (Venezuela is also part of Mercosul, I think).
"Insiders" don't have to make stupid guesses what this might mean. Insiders _know_ what Apple is doing. That's because they are inside, and that's why they are called "insiders".
The people making guesses about a production move to Brazil are either overpaid information whores who don't have a clue, or some random MacRumors poster, not having much more of a clue, but at least not pretending and getting paid for it.
FTFA:
I would take that with a grain of salt. Mercadante and his political party have strong root and support from blue collar workers. Heck, their party name can be translated as "Workers Party". So this could be nothing more than a political move to increase his popularity with his support base.
Mercadante + Foxconn ... Yeah, that's a source you are really trust ...... NOT.
morcego
boas vindas ao nosso novo overlords rentÃvel
Automatic translators often give ridiculous results. That's the case here.
Oh, and how do you know his hovercraft *isn't* full of eels, you insensitive clod?!
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
not only that china has no worker / plant safety.
After that high speed rail crash they moved to fast to cover it up.
China also likes to copy stuff on the cheap and cut corners all over the place.
From our data is looks like the other Big "A" is also making investments in Brazil. http://www.cedexis.com/is-amazon-cloudfront-in-brazil/ Ed ed@cedexis.com
Hon Hai/Foxconn, Apple's iPad manufactuer in China, is also setting up production in Brazil. It's nothing more than that. I wouldn't expect a Brazilian and Chinese iPad to be any different, except maybe in the bikini line.
It's was a mistake, the correct name is: Aloizio Mercadante.
http://www.michel.eti.br
Overvalued Brazilian Real – Discourages exports.
Highly regulated employment market
Very slow court system (to settle contract disputes)
Highly complex tax system (most complex one in the Americas)
Brazil is getting better, but I can’t see Apple exporting IPads from Brazil to the US / Europe.
If you have production and want to have design, what do you do? Hire engineers, it costs something in the order of $100 k in tuitions to create a new engineer, there are thousands of engineers graduating every year all over the world.
If you have design and want to have production, what do you do? Building a new factory costs on the order of $1 billion, that's four orders of magnitude more than educating someone to be an engineer.
Giving priority to design over manufacturing only works as long as there is excess manufacturing capability in the world, so you can get a new fabricating facility for less than it would cost your current fabricator to get into the design business.
Believing the current situation will last forever is how big corporations die.
Comment removed based on user account deletion
First, since you like talking capital outlay, look in to the equipment they have for their development. Thousands of high end servers, a massive Cadence simulator, high end test equipment, and so on.
Then look at their people. It isn't one guy. It isn't 10 guys, it is thousands. Those salaries start adding up.
You are talking a lot of equipment and a lot of people. It isn't one guy sitting with a desktop.
Finally, just have a look at others that have tried. The market is littered with those that just couldn't compete with nVidia and ATi. You have some like S3 and Matrox that couldn't keep up and so stopped trying, producing only low end ans specialty parts. You have others like 3dfx that did well, but then fell because they couldn't adapt fast enough. You have still others like Bitboys that never managed to launch a product.
Hell Intel even failed. They were trying to launch a dedicated GPU, the Larabee, and it ended up not working out and was canceled. This is from a company that designs processors, has done basic graphics, and fabs chips. They still couldn't compete.
What nVidia does is highly technical and very difficult. It isn't something you do by hiring an engineering grad and telling him "go to it." It is a massively expensive process.
Brazil has a problem with the large amount of regulations, but that can be managed. Regulations are always worse for small companies, for a large corporation like Apple the cost of the legal team to handle that is proportionally less, there's an economy of scale in paperwork.
The advantage in Brazil today is the stable political system. Being governed by a leftist political party that has a center-right economic policy is a great advantage. The hard lessons of the hyperinflation of the 1980s taught Brazilian economists to follow Friedman rather than Krugman, Brazil isn't going to spend a trillion dollars they do not have on some voodoo "stimulus".
Political stability is one of the most prized situations for big corporations, everything else can be accounted for in the business plan.
That's what's corruption is all about - not paying taxes.
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Yes, Brazil does have a lot going for it. I have been impressed with the way it has been growing for the past 10 years. Lula got a lot of things right. However, manufacturing has been lagging.
That being said, no, having good business plan is not sufficient. If regulations add 5% to 10% (to pull a number out of thin air) to a product and there are other countries that have political stability and lower regulations. It’s hard to make a business case when you are fighting an uphill battle. One has to have an edge in that case - let us say to avoid tariffs or a collection of staff that can’t be easily replicated (Embraer).
And now we come to the Dutch Disease – a disease of the rich. Right now Brazil is suffering from a overvalued currency. A big reason it is suffering is because it’s growing and it’s exports a lot of raw materials. That is going to add another 10% to 30% to any IPad that is being exported. That number is not pulled out of thin air.
So, according to the article, China is dropping production by 4 million. The article implies that Foxcom’s Brazilian plant will pick up the slack. I doubt it’s for export out of the local tariff zone. What is the local demand?
Sure it's been 25 years, but you'd think that Apple would still be pissed about the Unitron Mac 512 debacle.
http://lowendmac.com/clones/unitron.html
When you have nothing left to burn you must set yourself on fire
I have also lived in both countries and can attest that Brasil has a much higher concentration of hot women than the USA does - speaking in general
I have no problem believing this, the difference between our populations is obvious (2010 Int. Obesity Taskforce). Note that the rates aren't directly comparable, as Brasil also has a more youthful population distribution which skews obesity numbers -- but I suppose that plays into the "hotness" distribution too:
Obesity Rates:
Brazil: M 8.9% | F 13.1%
USA: M 32.3% | F 35.5%
"Nations have passed away and left no trace,
and history gives the naked cause of it--
one single, simple reason in all cases;
they fell because their people were not fit."
-- Rudyard Kipling
How about the fucking radiation pouring out of Fukushima? Japan? It's a goner. It would be more merciful at this point if a giant earthquake or tsunami wiped out the whole continent. Less suffering, no horrible birth defects, no prolonged (or swift) and agonizing deaths due to radiation poisoning, no parents having to watch their kids die. Nuclear power? I call bullshit.
Brazil provides huge tax breaks for products *assembled* in the country with local workforce, even if all the components are manufactred elsewhere. So the big manufacturers just import the component kits from China and assemble them here. This is true for Sony notebooks, the Xbox360 (recently started to be assembled here, and will start selling cheaper than the Wii for that alone), and the same goes for electronics such as phones, monitors, TVs, etc. Foxconn isn't starting up a facility out of nothing, the Sony vaio line is already assembled by them in Brazil.
Recently the legislation was changed to include tablets in the tax break law, and local assembly of ipads here will start soon. That is not a rumor and has been on the brazilian news for months, with official word from both the government and Foxconn. How much of the global market will be "served" from the brazilian output is the actual question. I wouldn't be surprised if the entire iPad 2 assembly transitioned to Brazil while the chinese sweatshops move to the iPad 3. With local economic treaties, it will be no surprise if the brazilian output of tablets starts serving the entire South America market right away.
Regarding the Argentinian coward's opinion on the quality of brazilian goods, there is no such perception of bad quality in the internal market, save for the automotive sector -- where the national industry is heavily protected and gets away with exorbitant profit margins on cars with considerably less features than cars from european and asian competitors.
brazil does...
Chinese devices sucked once upon a time. Now you are posting from one.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
Brazilian government has announced several incentives for tablet production in Brazil:
http://www.sourcingbrazil.com/tablet-tax-cut-game-changer-for-brazil-it/
Additionally, the law for informatics (lei de informática) ensures huge tax cuts for companies investing money in R&D, and this could be almost anything related to HW or SW development. Add to that the fact that Brazilian products has easy access to all Latin American market and one will that this decision seems very rational and expected.
Hello,
I just read a related news about Microsoft starting to build Xbox 360 in Brazil (portuguese only):
http://oglobo.globo.com/tecnologia/mat/2011/09/27/microsoft-confirma-fabricacao-do-xbox-360-no-brasil-reduz-preco-do-console-em-40-925453959.asp
The prices will decrease 40% in average for local customers.
Several of China's high speed rail systems were engineered by German and French companies.