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Plans to produce Apple iPads in Brazil this month have been delayed by continuing negotiations to secure financing for the project, Science and Technology Minister Aloizio Mercadante said Tuesday.

In April, Taiwan computer manufacturer Foxconn Technology Group and the Brazilian government announced plans to start production of the tablet in December, making Brazil the second emerging market to produce iPads after China.

With great fanfare, Brazilian authorities said in recent months that the country would have a "flood of tablets by Christmas" and that this would include production of the iPad. Foxconn President Terry Gou visited Brazilian President Dilma Rousseff in October and both parties reiterated their intentions.

Earlier this month, however, Mercadante toned down those expectations, saying no date had been set for the start of iPad production. He gave no further details until Tuesday.

"The Brazilian part, including the business model and conditions, is still in negotiation," he said on the sidelines of an event involving foreign scholarships. "The first manufacturing module requires a very large investment on the order of $4 billion--local participation has been the biggest challenge."

Neither Apple nor Foxconn officials responded to requests for comment.

The problem seems to be in lining up local partners and government commitments to provide the big investment needed. The project will involve large-scale capital inputs, financial as well as physical, including energy, water and other types of infrastructure necessary for specialized manufacturing.

Foxconn already has some production facilities in Jundiai, Sao Paulo, one of which will produce the iPhone. Mercadante said Tuesday that production of Apple iPhones in Brazil would begin as scheduled at that facility on Dec. 16.

Foxconn also produces items for other companies like Hewlett-Packard and Dell.

iPads are very popular among Brazilians, who have to travel to Miami or elsewhere to buy them or pay a local tax rate of about 36% on imported computer goods. Once they are produced locally, they will no longer be subject to the high import tariff.

Meanwhile, the delay in the iPad project has given several other tablet producers setting up manufacturing facilities in Brazil a headstart, and they are already taking advantage of recent tax breaks offered by the government to in-country device manufacturers.

Mercadante said several companies with manufacturing facilities in Brazil have already begun production of tablet computers, including Motorola, Samsung and Toshiba Corp. affiliate Semp Toshiba, Positivo.

-By Gerald Jeffris, Dow Jones Newswires; (5561) 3335-0832, gerald.jeffris@dowjones.com

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