Recession boosts Brazil chip industry

The great recession has caused pain across the globe, but it's turned out to be a boon for the man trying to build a chip industry in Brazil.

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The great recession has caused pain across the globe, but it's turned out to be a boon for the man trying to build a chip industry in Brazil. Ceitec SA, the state-backed venture set up to develop Brazil's chip industry, opened its first semiconductor factory in February, and plans to add dozens more chip designers to its ranks by the end of this year.

"The crisis has actually helped quite a bit," said Eduard Weichselbaumer, CEO of Ceitec, in a phone interview. "Building a fab during a downturn is actually what you should do and hiring during a downturn is also what you should do."

Hard times for other companies have helped him pick up chipmaking gear on the cheap, and lure experienced chip design engineers to Brazil. Middle management at the company has basically been imported, he said: either Brazilians that had been working elsewhere and returned to work at Ceitec, or foreign nationals.

Finding opportunity amid the downturn is boosting Brazil's effort to build a chip industry, but there is rising competition for chip talent among a number of developing nations working to build their own prowess in this essential technology. China also wants to start a chip dynasty, while India hopes to translate its success in software to the chip industry and another newcomer, the United Arab Emirates (UAE), is using petro-dollars to chase its chip dreams.

The reason nations want to build their own chip industries is clear: chips are the future. Semiconductors are at the heart of all electronic devices, the calculating engines of PCs, the graphics and display engines in digital TVs, the power managers in hybrid cars and more. Increasingly, they're finding even more uses: in medical devices to improve diagnostics, in refrigerators to manage power, to name a few.

But building a chip industry is no easy task.

Weichselbaumer faces the third attempt by Brazil to enter the chip industry, while other countries, such as China, have failed in the past as well. The main obstacle is cost. Chip wafer fabrication plants, or fabs, cost billions of dollars and require stable electric grids and a number of side industries to feed them the materials, including silicon wafers and gases used in chip making.

Japan's biggest chip maker, Toshiba, last month cited a need for improved infrastructure in Brazil, particularly its power grid, before it would consider building a chip factory there. Brazil's two biggest cities, for example, plunged into darkness in November last year due to a major power disruption. Such blackouts appear to be a yearly phenomenon in the country.

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