Brazil plans to join the global semiconductor chain. Well, sort of

Brazil’s new industrial policy, unveiled last week, is effectively the government’s third practical move to integrate the country into the global semiconductor manufacturing chain. 

The first was the March 2023 extension of the sector’s tax incentive program, PADIS, to 2026. The second move was to reverse the liquidation process of state-owned chipmaker Ceitec in November. 

The idea behind all these moves is to use Ceitec to develop specific use cases and skilled labor for Brazil, focusing on key areas such as energy transition. Assessing market demand for some of Ceitec’s 45 patents is essential to better direct efforts to restart operations. 

“To restart Ceitec’s production after a three-year hiatus, it will be necessary to update its machinery, which would cost USD 20 to 30 million over the next two years, with funds already approved by the Science and Technology Ministry in 2023, as well as to rebuild the company’s workforce,” Henrique de Oliveira Miguel, the ministry’s secretary of digital transformation, tells The Brazilian Report. 

Recruiting skilled workers has recently become more difficult, as dozens of former employees are suing Ceitec. They argue that if the liquidation process is canceled, so should their layoffs. Of the 179 employees the company had before liquidation, 103 were laid off. 

“A judge recently ruled that the company must reinstate some of them, which could even come in handy. In any case, it would take too long to rebuild the workforce with public servants through competitive selection processes. We are looking into hiring people on a temporary basis and outsourcing some of our needs. We need at least 60 workers because we want Ceitec to be operational by the end of this year,” says the current director of the state-owned company, Augusto Gadelha. 

A recent mapping of the company’s needs shows 114 vacancies. Most of the employees retained in the last few years have been in the operational area — they had to keep machines, gases, and chemicals under control even when Ceitec was at a standstill. 

But considering the funding lines listed in the new industrial policy and the resources that Ceitec will need, the federal investment will not exceed BRL 600 million (USD 121 million) over the next two to three years – very little compared to what industry powerhouses have recently announced, such as Joe Biden’s USD 280 billion Chips and Science Act.

This is understandable, as Brazil does not have the available resources or a semiconductor supply chain to justify an investment of this magnitude. “And no foreign government or private group is going to pour money...