SANTA CLARA, Calif. – Fernando Coelho didn’t intend to become an embedded system developer, but when Brazil’s unfriendly tax policies collided with its emerging market opportunities, that’s just what happened.
The story of the Sao Paulo TV producer is an example of the hopes and challenges of Brazil’s fledgling electronics industry.
“I wasn’t supposed to be a developer, but I became one to build my own network infrastructure,” said Coelho, who started video services provider ImagineAgeTV in 2005.
High taxes on imported Ethernet IPTV set-top boxes “broke the business model,” forcing Coelho to create a four-person engineering team to design his own device. Today the 32-person startup reaps about $4.5 million a year from its network of 1,000 homegrown PC-based set tops, a third of which deliver on-demand services over dial-up class links to remote areas “in the middle of nowhere, in jungles and on ferries,” he said.
For the last decade, the Brazilian government has been hammering out more business friendly policies and initiatives to nurture an electronics market expected to surpass $70 billion in 2012. It bankrolled South America’s first chip foundry, Ceitec S.A., in 2009.
Ceitec now employs 175 people including 55 chip designers, ramping production of 600-nm process technology on six-inch wafers. It aims to make as many as 800 wafers a week when running at capacity in about 2014, said Eric Fabris, an engineering educator who spoke on Brazil’s industry in a recent panel discussion here.
In early October, two Brazilian banks announced plans for a $500 million investment in a second fab, SIX Semicondutores. IBM is said to be taking an 18 percent stake in the venture which mainly aims at export markets and expects to be in production in about two years.
“The government’s desire [to nourish its electronics industry] is big, and they have money, but they don’t know how to do it,” said Jose Scodiero, a representative of ARM in Brazil, speaking on the panel. “Until 1992 there were no [electronics] multinationals in Brazil, we just assembled cars and computers [for them] and we are still somewhat in that mode,” said Scodiero, who has worked for both Apple and AMD in Brazil.
“I think we are making big progress,” said Jonny Doin of Alpha Instruments, an embedded developer now helping Coelho build an ARM-based set-top box. “One hundred percent local development is becoming a possibly—we are even getting to the IC level, but we still lack everything—we still come to the U.S. for training and test boards,” he said.
Coelho noted that Brazil’s fleet of 15,000 public transit buses use a homegrown embedded system for ticketing and its garbage collectors use a truck monitoring system also developed in Brazil. “I believe embedded solutions are a significant link in chain of development for emerging markets."
Good observation. I would add that Brazil may need a semiconductor industry more than the semiconductor industry needs a new base of design and manufacturing of chips.
I hope Brazil is tracking the experiences of places such as Singapore and the lessons they teach.
I'm not sure there's room for another success story on the order of Korea or Taiwan.
It seems to me that the movement to develop a domestic semiconductor industry in Brazil has moved in fits and starts. When I had a chance to travel to Brazil for the Ceitec grand opening a few years ago, I was told that there are dozens of small chip design houses in Brazil. But whether Brazil can truly be a place where a serious volume of chips are built, I think that remains to be seen. Government support is there sometimes, then not, it seems.
@Rick, we have plenty.
In the industrial instrumentation and automation sector, for example, there is a healthy competition among the players, that often develop locally their products from board to case. That is what we do.
The difference from the development done in the 1980's, when Brazil had a closed market for imported hardware and software, is that now we compete head to head with top products designed in the USA and Europe and also with very competitively priced China.
The local development have had to improve or perish.