Officials underscore Brazil's chip-making ambitions

Japanese to build fab in Brazil?
Weichselbaumer's initial strategy for Ceitec is to find opportunities where the technology barriers are relatively low in markets that are not dominated by one or a few competitors. To sell the Chip de Boi device to Brazilian cattle ranchers, Ceitec ended up building the entire tag system that the RFID device goes into and has a sales force targeting ranches in Brazil.

Ceitec SA officially started operations last year. Though the company took its name from a government-backed R&D effort that launched several design centers earlier this decade, Weichselbaumer insists that Ceitec is a true startup. He acknowledged that the company should have probably adopted a different name to avoid confusion with the government program, but said Brazil's parliament insisted on the name Ceitec in an effort to "show continuity."

Weichselbaumer, a 28-year veteran of the semiconductor industry who has held management positions at large firms and founded some successful startups, describes Ceitec's progress as the most rapid he has ever seen for a startup. He largely credits government backing, noting that the company has not had to raise money from private sources. The company currently has about 120 employees, many of them engineers from other countries. Da Silva told the audience that Ceitec would have about 250 employees by the end of the year.

While the Porto Alegre fab may not be a technological marvel, Weichselbaumer notes that the cost of the building and equipment are already written off (the building and most of the equipment were originally put in place by the government program).

In his speech, da Silva stopped just short of accusing Japan of reneging on a promise to build a fab in Brazil. He said that in 2006 when Brazil agreed to adopt Japan's ISDB-T digital TV standard, Japan agreed it would build a semiconductor fab in Brazil. But this has not yet happened, da Silva noted. He said Brazil needed to resume talks with Japan on this issue. He added that Japan's frequent changes of prime minister complicate the issue.

Da Silva did not associate a particular Japanese company with any promise to build a fab.

Rezende acknowledged that Brazil has been trying to lure chip companies to set up fabs or other facilities in Brazil for years. He said Intel Corp. nearly chose Brazil as the site of a test and assembly facility in the late 1990s, but that the company ultimately built that facility in Costa Rica.

A number of multi-national companies have design centers and other facilities in Brazil, including Freescale Semiconductor Inc. (formerly Motorola), which has operated in Brazil since 1998. In 2006, Intel's venture capital arm created a $50 million fund to invest in technology companies in Brazil.

Rezende said the Ministry of Science and Technology supports 10 chip design houses based in various regions of Southern Brazil.