China's Huawei to invest $800 million in new Brazil factory amid 5G push

China's Huawei to invest $800 million in new Brazil factory amid 5G push
FILE PHOTO: A Huawei logo is seen on a cell phone screen in their store at Vina del Mar, Chile July 18, 2019. REUTERS/Rodrigo Garrido/File Photo Copyright Rodrigo Garrido(Reuters)
Copyright Rodrigo Garrido(Reuters)
By Reuters
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By Gabriela Mello and Eduardo Simões

SAO PAULO (Reuters) - Huawei Technologies Co Ltd plans to build an $800 million (£661.43 million) plant in Brazil's Sao Paulo state over the next three years, the governor said, as the Chinese telecom giant ramps up its presence in Latin America despite U.S. objections.

In an audio recording of a press conference in China on Friday, Sao Paulo Governor João Doria, accompanied by Huawei executives, said the company was gearing up to build the plant to respond to expected demand following Brazil's first 5G spectrum auction, scheduled for March 2020.

Huawei already has one factory in Sao Paulo, which employs 2,000 people directly. Huawei will decide on the location of the next factory in the coming months and expects to invest the $800 million over a three-year period after the 5G auction is completed, the governor added in a statement.

It was not immediately clear whether the factory will be exclusively dedicated to 5G technology, according to two sources with knowledge of Huawei's plans.

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 hiring people locally to manage the business.

Initially, handsets would be imported from China, but the world's third-largest smartphone manufacturer was mulling 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.

Trump raised the issue of Huawei 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, saying the government trusts the company and the country needs its technology.

Rivals noted that Huawei is under particular pressure to step up its presence in emerging markets like Brazil and Russia given that it has been shut out of the United States, noting that the Chinese company looked likely to reap tax breaks from Sao Paulo state.

Under the terms of the agreement, Governor João Doria said Huawei will invest in the state's Institute of Technological Research between 2020 and 2022, as well as in public education.

The new factory will produce for both the Brazilian market and other countries in South America, the Sao Paulo government said.

Sweden's Ericsson <ERICb.ST> and Finland's Nokia Oyj <NOKIA.HE> also have factories in Sao Paulo state and are racing to lead 5G deployment in Brazil.

Ericsson and Nokia did not immediately respond to Reuters request for comment.

(Editing by Steve Orlofsky and Dan Grebler)

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