Brazil: A technology advisor witnesses first-hand the biggest protests in 20 years that swept the country.
As I traveled around the country, I noticed its infrastructure, apart from a few pockets, needs a lot of work done in readiness for handling huge numbers of people for the big events coming up in 2014 (World Cup) and 2016 (Olympics). Apart from the domestic airports in São Paulo (Congonhas) and Rio de Janeiro (Santos Dumont), most of the airports in the cities you would travel to for anything related to the tech sector need lots of investment. For an international visitor arriving into São Paulo or Rio de Janeiro's international airports, these larger airports give the impression that they were built decades ago and have not been maintained.
The experience at Rio de Janeiro's Santos Dumont (domestic airport), however, is the best in terms of getting through the airport that I have experienced in Brazil and is good even by some modern international airports elsewhere in the world.
In terms of electronics and communications, Brazil has mixed levels of success. Communications, and particularly mobile communications, have grown rapidly in Brazil -- there are around 260 million mobile subscribers. Most of the market for handsets has been for feature-phones, but by the end of this year smartphones are expected to account for around 20 percent. The Brazilian has been used to sending text messages rather than accessing Internet on a phone, but the latter habit is now growing.
The electronics industry is very different from what you might be used to in the US, Europe, or Japan and the Far East. There are pockets of system-on-chip design at various university research and design centers in São Paulo, Porto Alegre, and Florianopolis, but otherwise most of the industry relies on imports of electrical and electronic components and instrumentation. According to the Brazilian electrical and electronics industry trade body, ABINEE, the country imports US$40.2 billion of electrical and electronic products, while it exports only $7.7 billion -- a huge trade deficit. The biggest import is components for telecommunications ($5.6 billion) followed by semiconductors ($4.7 billion).
The biggest sectors in terms of sales within the country are computers ($22.2 billion), followed by telecom equipment ($11.6 billion) and industrial equipment ($11.4 billion); electrical and electronic component sales are around $4.9 billion.
In talking to people like ARM and the electronics department of the University of São Paulo, I uncovered some of the challenges in stimulating the growth of the fabless semiconductor sector in Brazil. It appears there is little incentive for companies to start and grow, despite having a foundry available (Ceitec in Porto Alegre). The big contract manufacturers in Brazil are mostly driven by price rather than delivering innovative new products and features, and hence tend to buy the lowest-cost kits from Taiwan and China to assemble and badge for the local market.
My reason for being in Brazil was in one of my roles, as a technology specialist advisor with the British Government's Technology Partnerships Unit.
The role is intense and focused on developing strong relationships with the tech sector in Brazil -- similar to my role back in the late 1990s, when I was asked to help build the business of ARC International in the US (this was the British startup that developed the first configurable 32-bit RISC processor now owned by Synopsys), and be part of the team that took it to IPO. At that time, I was very focused on building the relationships with partners and companies in Silicon Valley to establish a strong presence there.
In my current role, I have been working as a "deal architect" to help high-growth British technology SMEs to accelerate their opportunities for business in the value chains of multinational and national companies in Brazil. The key themes covered by this activity are companies involved in areas such as big-data, cloud computing, the Internet of Things and M2M, smart infrastructure, digital economy/social media (including mobility, NFC), design, user interface, life sciences, and enabling technologies (such as electronics systems and nanotechnology). The objective is to identify projects and opportunities in Brazil for British small and midsized companies with expertise in these areas.
While Brazil manages its internal struggles, business still goes on. In the technology sector, it is a country with opportunity for those prepared to take the medium-to-long-term view.
About the author
Nitin Dahad is a technology industry specialist helping tech companies internationalize, with a background in electronic engineering and marketing. He is also publisher of The Next Silicon Valley. He has worked with tech companies including ARC International, CIP (Centre for Integrated Photonics), Coresonic, Dialog Semiconductor, Dyzle, Frontier Silicon, GEC Plessey Semiconductor, Jennic, Marconi Instruments and National Semiconductor.