The content has been shared, if you want to share this content with other users click here.
Last week, US technology firm Qualcomm and Taiwanese ASE announced an MoU with the Brazilian government for the creation of a joint venture with combined resources of US$200mn for the construction of a chipset factory in Brazil.
The announcement looks promising, but Qualcomm had already signed an MoU with the Brazilian government focusing on chipsets in the past back in May 2014.
At the time Qualcomm said that the deal was aimed at boosting the local ecosystem for developing high-end semiconductors for mobile devices, and pointed out that the MoU was "non-binding and non-exclusive."
In that agreement, the ministry of development, industry and foreign trade (MDIC) and the now-merged communications (MiniCom) and science, technology and innovation (MCTI) ministries were to be equal partners in the deal.
Two years earlier, in 2012, Qualcomm closed another investment deal with Brazil's government, though that time it was not directly related to chipsets.
Brazil has an interesting record of auspicious chipset and semiconductors ventures; some of which have succeeded, while others have failed.
In 2008, Japan's Toshiba was reported to be installing a semiconductor plant in Brazil, following advances in the development of the Japanese-Brazilian digital TV standard. However, the project failed to move forward and the factory never saw the light of day. The Toshiba conglomerate, in turn, faces serious woes.
In November 2012, US giant IBM, Brazilian development bank BNDES and former Brazilian billionaire Eike Batista's EBX group announced a deal to build a 1bn-real (US$317mn) chipset factory in Minas Gerais state.
The project was supposed to be carried out by Six Semicondutores, a JV created by the three companies from EBX's IT unit SIX Soluções Inteligentes, along with construction company Matec, technology firm WS-Intencs Technology and Minas Gerais development bank BMDG, all of them having a stake in the new company.
With the crumbling of Batista's empire in 2013-2014, Argentine industrial conglomerate Corporación América bought EBX's stake in Six Semicondutores, equivalent to 33% of the total stock, the same amount owned by Brazil's BNDES and in 2014, Six was rebranded as Unitec.
The chipset factory was initially expected to be ready by mid-2014, but due to the problems surrounding Batista and the transfer of the shareholding in SIX, the project was delayed and production effectively only started in the second half of 2016.
Now in operation, although not at full throttle, Unitec claims to be "the biggest and most modern semiconductor manufacturer in the Southern Hemisphere," and the first with an end-to-end production cycle.
In addition to Unitec, the major semiconductor groups currently operating in Brazil are Ceitec, a public company linked to the country's science, tech, innovation and communications ministry (MCTIC); HT Micron, a 2014 JV between South Korean firm Hana Micron and local group Parit; and US company Smart Modular Technologies, which has operated in Brazil since 2005.
In November 2015, Brazil's largest ICT R&D firm, CPqD, opened what was considered the first factory in the Southern Hemisphere for production of advanced photonic chipsets.
BrPhotonics is a JV with US semiconductor firm GigOptix and is partially funded by the communications ministry's fund for technological development of telecommunications (Funttel), BNDES and project financing agency Finep.
In November, another Taiwanese firm, Adata Technology, devoted to the production of DrRam (memory) modules, USB flash drives, memory cards, SSDs (solid state drives) and portable hard drives, announced the installation of its first chipset factory in Brazil.
The unit will be located in Santo Antônio da Posse, São Paulo state, and involves an estimated investment of US$80mn.
For the industry, the end of tax exemptions and fiscal benefits for production of semiconductors was a major blow to the sector.
In August 2015, already facing pressures to increase revenues and curb public spending with her broad tax break policies, former president Dilma Rousseff vetoed a senate-approved bill that permanently abolished five taxes on purchases of materials and components needed to produce semiconductors in Brazil.
At that time, Rousseff argued that her veto was necessary because the bill exacerbated falling tax revenues, while failing to specify where resources would come from to fund the move.
According to the latest amendments, Padis was intended to remain in force until May 2015, the deadline by which interested companies had to submit their proposals, but senators approved a bill in July that year making the exemptions permanent. It was this bill that Rousseff vetoed.
The semiconductor companies and the electronics industry as a whole also strongly opposed the end of another tax relief policy, one for Brazil's consumer electronics.
Then, the semiconductors industry association ABISEMI published an open letter calling on the government to stand by the breaks and backtrack on its decision to reinstate the social taxes known as PIS-COFINS on sales of locally-manufactured computers, tablets and smartphones.
"Against a backdrop of strong currency instability, shrinking GDP and growing interest rates, the increase in prices will naturally further decrease consumption of computers, tablets and smartphones. Meanwhile, this scenario tends to raise Brazil's already high trade deficit, which reached US$6bn in 2013 in the semiconductor segment and US$36.3bn across the entire electronics industry," read the letter, signed by Abisemi president Rogério Duair.
According to Abisemi, the sector generates 1.5bn reais in revenues a year in Brazil.