August 9, 2019 / 12:14 PM / 11 days ago

China's Huawei to invest $800 million in new Brazil factory

SAO PAULO (Reuters) - Huawei Technologies Co Ltd plans to build an $800 million plant in Brazil’s Sao Paulo state over the next three years, the governor said, as the Chinese tech giant ramps up its Latin American presence against U.S. objections.

FILE PHOTO: People look at products at the Huawei stall at the International Consumer Electronics Expo in Beijing, China August 2, 2019. REUTERS/Thomas Peter

On a trip to China on Friday, Sao Paulo Governor João Doria, accompanied by Huawei executives, said the company was gearing up to build the plant to meet expected demand following Brazil’s first 5G spectrum auction, scheduled for March 2020.

The new factory is likely to produce smartphones, the company told Reuters in an email. “Depending on the performance of the smartphone operation in the local market, Huawei will consider building a plant in Sao Paulo in the near future,” it said in a statement.

Production would be for domestic and foreign markets, according to the Sao Paulo government.

Huawei, which has been operating in Brazil for 21 years, already has one factory producing equipment for telecoms infrastructure in Sao Paulo state, with 2,000 employees.

The location of the new plant, which according to Doria will employ 1,000 people, will be decided in the coming months and the $800 million will be invested over a three-year period following the upcoming 5G auction.

In April, Reuters reported that the Chinese company was making a second attempt at cracking the Brazilian smartphone market with the launch of two high-end handsets and local hires to manage the business.

Huawei, the world’s third-largest smartphone manufacturer, imports handsets from China for the Brazilian market and has mulled local production.

U.S. President Donald Trump has urged governments worldwide to shun Huawei, arguing its equipment could be vulnerable to Chinese eavesdropping.

So far, few have heeded the warnings, but limitations in the U.S. market have pressured Huawei to strengthen its footing elsewhere.

Trump raised the Huawei issue during a visit by Brazilian President Jair Bolsonaro to the White House in March. But Vice President Hamilton Mourão said in June that Brazil had no plans to bar Huawei from its 5G network.

U.S. diplomats did not immediately respond to a request for comment.

Sweden’s Ericsson and Finland’s Nokia Oyj also have factories in Sao Paulo state and are racing to lead 5G deployment in Brazil.

Ericsson and Nokia have not responded to a request for comment on Huawei’s push into region.

Reporting by Gabriela Mello; Additional reporting by Eduardo Simões in Sao Paulo; Editing by Brad Haynes, Steve Orlofsky, Dan Grebler and Richard Chang

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