The semiconductor crisis could have cost Brazil its democracy

When Covid forced people to work from home in 2021, it also triggered an unprecedented global semiconductor crisis. Sales of personal computers soared, as did demand for data centers (with people spending more of their time video-calling and video-streaming), providing a stress test for an industry already accustomed to cyclical gluts and shortages. 

The shortage of chips, which power everything from phones to machines to cars, slowed production lines and fueled inflation in many countries. In Brazil, however, the semiconductor crisis also posed an existential threat to the country’s democracy.

In 1996, Brazil began implementing electronic voting; for more than 20 years, all elections in the country have been 100 percent electronic. But the voting machines that allow Brazil to tally more than 123 million votes in a matter of hours also run on the same chips that had become scarce worldwide, forcing electoral authorities to launch a covert diplomatic mission in mid-2021 to unclog supply chains and allow for the substitution of roughly 225,000 machines in time for the 2022 election.

The operation involved electoral officials, current and former diplomats from Brazil and the U.S., as well as private companies and consulting firms that helped voting machine manufacturers get the chips they needed and avoid the worst. 

The Brazilian Report mapped these efforts, speaking with sources in Brazil and the U.S. Some spoke off the record because of the sensitivity of the matter.

This race for semiconductors took place while then-President Jair Bolsonaro constantly railed against the country’s voting system, claiming that electoral officials could tamper with the vote-counting machines and manipulate the results. For much of his time in office, Mr. Bolsonaro also said that system vulnerabilities allowed hackers to rig elections. None of his claims have been backed up by evidence.

In 2021, Mr. Bolsonaro threw his full weight behind his proposal to reinstate paper ballots — and repeatedly threatened not to accept defeat in the 2022 election if his demands were ignored. In August of that year, his proposal was put to a vote in the lower house of Brazil’s Congress, but did not come close to achieving the 60-percent majority needed to amend the Constitution.

A year later, in July 2022, Mr. Bolsonaro hosted dozens of ambassadors in Brasília for a presentation on the electronic voting system. He provided a mishmash of half-truths and blatant lies to discredit the system and urge foreign diplomats not to immediately recognize the results in the event of a landslide Luiz Inácio Lula da Silva win, which polls suggested was possible. 

This meeting sparked accusations of abuse of power against Mr. Bolsonaro. The trial, scheduled for June 22 at the Superior Electoral Court, could render him ineligible for public office.

This backdrop is essential to understanding why the operation to secure the chips was necessary and why the people involved did their best to keep the Brazilian president in the dark during the negotiations.

Mr. Barbosa served as Brazil’s ambassador to the United Kingdom and the U.S. in the 1990s and early 2000s. “Scandiucci said that [then-Chief Electoral Justice Luís Roberto] Barroso wanted to talk to me.” Justice Barroso was concerned about a looming crisis that could fuel electoral misinformation and create a crisis of confidence in the system itself. 

Positivo Tecnologia, a company based in the southern state of Paraná, had won a tender the previous year to produce 225,000 new voting machines to replace models produced between 2006 and 2008 that had reached the end of their useful lives. 

But the global chip crisis, combined with a move by U.S. factories to hoard all the semiconductors they could, meant that Positivo could not obtain the essential components for the voting machines. In May 2021, the company informed the country’s electoral authority of the problem.

Brazil’s voting machines used components from Dallas-based Texas Instruments and Taiwan’s Nuvoton. Both suppliers had created production bottlenecks and were no longer able to meet their delivery deadlines. “Without those chips, voting machines were not going to be produced in time for the election,” Mr. Barbosa recalls.

Luís Roberto Barroso, the chief electoral justice, put a contingency plan in motion. “If the components hadn’t arrived, we would have ‘enhanced’ older models to use,” he told The Brazilian Report in a video interview. These enhancements consisted of updating all components that could be replaced and retesting the ballot boxes for glitches.

“It would be like having an old vehicle from the 1990s on a modern highway,” he adds. “This solution was far from ideal, as the risk of malfunctioning machines would have been greater. Still, Brazil would be able to hold elections as usual.”

Far from ideal, indeed. In 2022, electoral authorities used a total of 577,000 electronic voting machines — 280,000 of which were older models. In November 2022, after Jair Bolsonaro lost the election, his Liberal Party filed a lawsuit to remove these ballots from the official count. 

The party argued that the machines did not function correctly, making it impossible for the voting systems to properly identify them. If the old machines were discarded, Mr. Bolsonaro would have been re-elected with “51.05 percent of the valid votes,” the lawsuit claimed.

The petition — which was quickly dismissed by the courts — echoes a conspiracy theory that circulated online shortly after Mr. Bolsonaro lost re-election, claiming he performed better on the latest electronic voting machines. 

“My tenure as chief electoral justice faced two major challenges: holding the 2020 municipal elections in the middle of the pandemic and fighting the push for the return of paper ballots,” Justice Barroso recalls.

Two former U.S. ambassadors were approached by Justice Barroso to assist in this effort: Tom Shannon (2010-2013) and Anthony Harrington (2000-2001).

However, the U.S. ambassador at the time, Todd Chapman, chose not to engage in the operation — not even meeting with Brazilian electoral officials before leaving his post in June 2021. 

Two American sources have confirmed to The Brazilian Report that Mr. Harrington, who is currently an executive at a Washington D.C.-based consulting firm Albright Stonebridge Group, made the connection between the Brazilian side and Texas Instruments. 

Access was facilitated by the fact that Mr. Harrington is himself a Texas Instruments shareholder. A source with direct knowledge of the talks said Mr. Harrington urged the company not to treat the Brazilian contract like any other and to move it up on its priority list. 

“There was too much at stake,” the source told The Brazilian Report, “and Texas Instruments posed no resistance to the request.”

Meanwhile, Chief Electoral Justice Luís Roberto Barroso was trying to facilitate shipments from the Taiwanese side.

Then-Foreign Affairs Minister Carlos França refused to get involved for fear that direct talks between Brazilian diplomats and Taiwan would anger China. After all, Brazil’s outright number-one trading partner has been increasingly outspoken in its claims over the autonomous island.

“While [Mr. França] didn’t help, he never presented an obstacle, either,” former Ambassador Rubens Barbosa recalls. More importantly, Mr. França didn’t bring the matter to the ears of President Bolsonaro — which could have jeopardized the entire project, as the president was the country’s biggest opponent to electronic voting. 

The Taiwan negotiations were aided by Tsung-Che Chang, the island’s representative in Brazil, and Taiwan’s vice foreign minister, Alexander Tah-ray Yui. “It was not a matter of trade; it was a matter of protecting Brazilian democracy,” said Justice Barroso. 

Negotiations with Taiwan continued until November 2021. The first chips arrived in December 2021, and production of the new voting machines finally kicked off in May 2022.

“We are fortunate to have an strong group of current and prior officials and business and organizational leaders in both countries who attend to the Brazil-US relationship,” Mr. Harrington told The Brazilian Report. “This facilitated our collaboration in support of a free and fair election and the integrity of Brazilian democratic institutions.”

Those involved in this effort to protect Brazilian democracy from its greatest test in decades kept it mostly to themselves. Still, they managed to celebrate when Justice Barroso visited the Amazon’s largest city, Manaus, where the voting machine motherboard is manufactured, to receive the first semiconductors.

Election officials toasted with overflowing jugs of cupuaçu, açaí, and red mombin juice. Although some of the attendees hoped the beverage selection would have included alcohol, too.

In February 2022, Justice Barroso briefly mentioned the race for semiconductors to power voting machines during his farewell address as head of the electoral justice system — and thanked all those who helped him in his search for semiconductors.

“All of them were our allies in a real international competition to obtain essential components,” he said.

The risk was perceived as so great that even the U.S. government broke character to make it crystal clear that it trusted the Brazilian democratic process — and to warn the former government that any attempt to overthrow it would be met with harsh consequences. 

In May 2022, Reuters reported that during a July 2021 meeting, CIA director William Burns told senior Brazilian government officials that Mr. Bolsonaro should stop casting doubt on his country’s electoral system. 

Scott Hamilton, a retired U.S. State Department official who served as consul general in Rio de Janeiro from 2018 to 2021, went public with the issue of Mr. Bolsonaro’s election threats in April 2022. In an op-ed published in newspaper O Globo, Mr. Hamilton urged American diplomacy to openly threaten Brazil with crippling sanctions to deter chaos.

A month later, Undersecretary for Political Affairs Victoria Nuland said in an interview that “we want to see, for the Brazilian people, free and fair elections in Brazil.”

Then, in September, the U.S. Senate passed a resolution “urging the government of Brazil to ensure that the October 2022 elections are conducted in a free, fair, credible, transparent, and peaceful manner.”

Crucially, on October 31, U.S. President Joe Biden was quick to recognize Luiz Inácio Lula da Silva as Brazil’s president-elect — helping to quash any attempts by Mr. Bolsonaro and his acolytes to overturn the results.

This crescendo of rhetoric was fueled by “a steady stream of Brazilian officials” who visited Washington or spoke with current and former U.S. officials, warning them of the dangers Mr. Bolsonaro posed to Brazilian democracy.

These fears were proven right on January 8 of this year, when hordes of far-right radicals, galvanized by years of statements against the electoral system, stormed the buildings housing the federal government, Congress, and the Supreme Court, overwhelming the police and creating chaotic and violent scenes in the heart of the country’s capital.

They protested the results of the 2022 elections, falsely claiming that the presidential race had been rigged in favor of Lula.

Subsequent investigations uncovered documents that show that senior members of the former government were indeed seeking ways for Mr. Bolsonaro to remain in power despite losing the election. 

Former Justice Minister Anderson Torres had in his possession a draft decree that would have placed the electoral courts under a state of emergency and created a committee with the power to nullify the presidential election results — which would be blatantly unconstitutional.

More recently, police found a series of documents in the possession of Army Lieutenant Colonel Mauro Cid that attempted to provide a legal basis for an old-fashioned coup led by Mr. Bolsonaro.

Given how close Brazil actually came to midnight, President Lula’s recent digs at the U.S. on issues such as Ukraine and China have disappointed many in Washington. “There was a true effort from the U.S. government to do what it could to help Brazil secure its electoral system and preserve its democracy,” says a source connected to the U.S. government. “One should at least respect that.”

Deputy editor Fabiane Ziolla Menezes, our chief tech reporter, contributed with reporting on the semiconductor crisis in Brazil.