Brazil pursues a new semiconductor policy

Somewhat behind its emerging peers such as India, which is close to striking a deal with the world’s fourth-largest semiconductor company Micron, the Brazilian government is preparing the ground for the launch of a new semiconductor production policy in the coming months, aiming to insert the country into the global semiconductor manufacturing chain by developing specific use cases and skilled labor for Brazil and Latin America. 

Today, Taiwan (TSMC) and South Korea (Samsung) are the world’s largest chip producers. But with its stimulus policy, the U.S. still produces 12 percent of semiconductors and dominates the industry in intellectual property and profitability through companies like Intel, AMD, Broadcom, Qualcomm and NVIDIA. Joe Biden’s USD 280 billion Chips and Science Act will only increase this technology monopoly.

The supply crisis for these components hit hard during the Covid pandemic and the first months of the conflict between Russia and Ukraine. In Brazil, the lack of chips, caused mainly by lockdowns and logistical disruptions in Asia, delayed the expansion of 5G technology and caused automotive factories to suspend activities. 

Beyond all that, the shortage of chips almost cost the country its democracy, as it also hit a manufacturer responsible for producing Brazil’s voting machines. As The Brazilian Report revealed, a covert diplomatic mission launched in mid-2021 prevented the worst from happening.

In recent conversations with authorities from the U.S. and China, President Luiz Inácio Lula da Silva and his foreign affairs advisor Celso Amorim signaled the country’s interest in establishing partnerships to develop this industry, including incentives to bring new players to Brazil. But concrete actions still depend on conversations between government bodies and the sector — some of these conversations continue discussions begun by the industry with the government of Jair Bolsonaro and its production chain a little over a year ago, amid the chip shortage. 

“Together with the electronics and automotive industries, among others in our production chain, we presented a plan that brought key items such as a lighter tax regime for the import of inputs and a major agreement between companies and universities for the training of specialized labor, focusing on two stages of the chain that Brazilian companies are involved in: packaging and testing. But nothing really got off the...