Apple has initiated the assembly of the iPhone 16e at its factory in Brazil, marking a strategic move to reduce dependency on China and realign its global supply chain.
Production is underway at the Foxconn Brasil Indústria e Comércio LTDA factory located in Jundiaí, São Paulo. Since 2011, Apple has produced entry-level models for the local market at this site, and the current 16e production is an expansion with export potential in mind.
The main driving force behind this shift is the high tariffs imposed by the United States on imports from China. The U.S. levies tariffs of up to 245% on certain Chinese products, whereas Brazilian electronics are subject to only around 10% in tariffs. By assembling iPhones in Brazil, Apple can significantly lower tariff burdens when exporting to the U.S.
Chinese-made iPhones face an average tariff of 34%, while those made in India are subject to 26%. Brazil, with its favorable trade environment, is emerging as a viable alternative due to its tariff advantages.
The iPhone 16e was initially launched in Brazil priced at $890, but some retailers are now selling it for approximately $670. This price reduction is attributed to the Brazilian government’s exemption of up to 60% of import tariffs on domestically assembled electronics.
Apple assigns the ‘BR/A’ suffix to the model number to identify Brazilian-assembled products. This designation can be seen on product packaging and online product pages and is used to distinguish devices covered under local warranties and to attest compliance with Brazilian manufacturing regulations. Models imported from China to Brazil are marked as ‘BZ/A’ or ‘BE/A’.
Local assembly offers Apple additional advantages. During the pandemic, supply chain disruptions at Chinese production sites impacted Apple’s delivery schedules. The Brazilian plant serves as a stabilizing force that diversifies production sites and mitigates supply risks.
Foxconn and Apple have maintained a long-standing partnership, and this production shift is an extension of that collaboration.
The timing of this move is also noteworthy. The Brazilian production commenced just before the U.S. implemented a new tariff structure, indicating a strategic decision that anticipates policy risks.
Industry experts speculate that future Brazilian production could expand beyond entry-level models to include premium models. Consequently, Brazil is evolving from a mere production base to a pivotal component of Apple’s global strategy.
Apart from Brazil, Apple is also enhancing production capacities in India and Vietnam, accelerating the reorganization of its global supply chain.