Rumor: Brazil plant to start production soon on iPad 3

Even as we await word on when the iPhone 5 will be released, some people are wondering when Apple might launch the third version of its highly successful iPad tablet. Today, Digitimes reports that a manufacturing plant in Brazil is getting ready to start production of the iPad 3. The report claims that the first shipments of the iPad will begin in December with Apple actually launching the tablet sometime in early 2012.

The plant in Brazil is owned by Foxconn, a company which has a long history with Apple, making its products in Chinese factories. This new plant is a joint venture between Foxconn and the Brazilian government. This new plant is apparently going online faster than originally planned. It was supposed to start operations in the first quarter of 2012.

Little is known about what new features Apple will put into the next version of the iPad. Many believe that it will have a higher resolution screen than the current iPad 2 and that it will contain the A6 processor which will have four processor cores compared to the two core based iPad 2. AppleInsider reports that some prototypes of the iPad 3 might already be circulating among its parts supply companies. That same article quotes financial analyst Mark Moskowitz with J.P. Morgan, who says that Apple should be in no rush to release the iPad 3. He says, "The other tablet entrants have stumbled so far, and that trend-line could persist deep into 2012."

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Hey, I do live in Jundiai too, the home of the new Foxconn production site.

I'm seeing a lot of wrong opinions about that from people outside, so here are some notes:

- That's the second Foxconn in our city, the other one makes micro-chips and so.

- The investment here by Apple/Foxconn was something like 12 billions US dollars. That kind of money could help USA right now, right? If that's "just another job Americans don't want to do", fine, we really want to!

- 300 dollars is the minimum income allowed by the brazilian government. A production worker at Foxconn will receive something like 1200 dollars minimum as it needs to be specialized. Engineers makes a lot more, like 8000, 9000 dollars (and local engineers was one of the biggest requirements from our government).

- We'd have a very strong law that gives every worker a LOT of benefits like medical care, paid vacations, retirement plan, unemployment insurance, etc, so a 5000 sallary costs at least 10k to the company. Yes, it's 100% the value of the sallary that the company needs to invest just to legalize the worker. So, it's not that simple.

- I live very near (like 5 km) and Foxconn is improving our roads and even making a lot of new ones. All of this already made my apartment 100% more valued (which made me very happy).

- Foxconn forced our government to cut some taxes from tablets to improve our inside market and easy the Apple production charge, in exchange (among other things) we're sending a lot of students/engineers to learn more about technology in China and to a lot of US/UK colleges. There was a lot of talk about using brazilian manwork, like 30% on launch, 60% on 6 months.

- We already have, in a 10 km radius, Toshiba, AOC, HP/Compaq, Philips, Sony and Samsung factories. On the neighboring cities we have Motorola, Dell, IBM and some others. We're half a hour from São Paulo (the city, because São Paulo is also our state), the forth biggest urban city in the world. Our region is becoming one of the strongest technologic centers on the world and our country is growing very fast (some people even said that BRIC - Brazil, Russia, India and China - is unstoppable and we'll give the cards very soon. read more at: http://en.wikipedia.org/wiki/BRIC).

-This Foxconn unit brought some other companies too. For instance: In October our Xbox 360 (and all Microsoft games) will be 100% "made in Brazil", so we're having a 50% price cut in everything Xbox-related with local Microsoft guarantee. Because of Foxconn too we'll be the first country in the world (outside China/Japan) to produce some kind of LCD screens.

So, Brazil is today a strategic move to Foxconn. A lot of companies do not want to come here because our workers are overpriced (with all these legal fees). Maybe the south-american iPad will be more expensive. Maybe Apple is tired/afraid of the suicidal chinese Foxconn or the communist government in there. Maybe our ores are better or cheaper. I don't know exactly why, but I do know that our country is growing at nitro speeds and every company is coming here at the same time.

While we see some people around the world (specially north americans) that don't even (wan't to) know where Brazil is on the map or thinks we're all jungle or dangerous cities, we're working hard. Very hard. And we know a lot about you. So you'll hear about Brazil a lot more as the years goes by. And that's cool to all you, because we're a very friendly country. =)

Mocosoft said,

Cause that's what Brazil needs, more Foxxcon and less Amazon rainforest.

The Amazon rainforest is 3000 kilometers away from here, so there's really nothing to do with it.

I'm wondering if this factory Foxconn will be worth in the region I live here in Jundiaí-São Paulo / Brazil. I live close to it. I see a lot of news in the local newspaper but did the high taxes in Brazil will be worth to buy iPad3? At least one thing is good, more jobs to our citizens.

Sigh. Great, because everyone knows this is just another job Americans don't want to do. I wonder what the cost would be to have it built in the U.S. and if it would hurt sales at all.

Hahaiah said,
Sigh. Great, because everyone knows this is just another job Americans don't want to do. I wonder what the cost would be to have it built in the U.S. and if it would hurt sales at all.
well, honestly... probably about triple.

Hahaiah said,
Sigh. Great, because everyone knows this is just another job Americans don't want to do. I wonder what the cost would be to have it built in the U.S. and if it would hurt sales at all.

Certainly all products have some measure of price sensitivity so Apple would be forced to balance the extra cost of production with fewwer sales of a more expensive product.

ie: suppose it costs $200 to make an ipad that sells for $300. Suppose this change added $50 to the cost of producing an iPad.

Apple could increase the cost of an iPad by $50 and make the same profit per iPad but probably sell a fewwer amount - that'd decrease their profits. They could increase the price by say $60 and sell some fewwer amount but if the extra $10 per unit sold makes up the 'loss' incured by selling fewwer products than it's a break even deal.

Alternatively Apple could entirely eat the $50 out of profit - they only make $50 per unit but stave off any losses because the price hasn't change.

How much a product responds to a price change varies depends on a lot of things - the type of product If you need medicine to live it really doesn't matter if costs $50 or $100, you're buying it anyway. If you're buying luxury goods you might be interested in a Ferrari at $50k but not at $100k.

It's likely that the iPad is in the 'luxury good' class of product and it's likely priced near a point where it responds rapidly to a change in pricing: it would only make sense for that to be the case because it maximizes profit.

No in terms of labor cost:
manufacturing sector employees in wealthy industrialized nations (England, America, South Korea, etc) typically take home around $2200 ± 10%. Brazilian employees typically take home around $300 per month ± 10% so you're looking at a difference of 750%.

It would bump the "employee cost" of an ipad from (for example) $15 to $100 to move from Brazil to America assuming everybody makes an 'average' wage. A typical Brazilian manufacturing sector worker makes around 2.5x more than a typical chinese worker.