Brazil: The Leading Candidate for Technology Industry Growth
Eduard Weichselbaumer, Chairman and Chief Executive Officer, CEITEC S.A.
The technology industry is usually defined by five geographies: North America; Europe,
the Middle East and Africa (EMEA); Japan; China; and the rest of the world (ROW),
which is often assumed to mean "all the other Asian countries."
It seems as if South America has been all but forgotten. But this is a good thing. Why?
Because today, South America represents the largest and most adaptable geography for
technology industry growth.
The key driver of this growth is Brazil. The country has the world's fifth-largest population
and the eighth-largest economy. Both the International Monetary Fund (IMF) and
the World Bank estimate that it will become the fourth-largest economy by 2012. Bank
of America Merrill Lynch forecasted that the Brazilian stock market will be valued at
over $160 billion by 2013. Furthermore, the country had the most stable currency in South
America for over 15 years.
And there's still a huge window of opportunity. Over 100 million economically
active Brazilians are still working toward their first home, first car and first computer. The
country's housing market is expected to grow by 1.6 million units by 2017, clearly far short
of need. PricewaterhouseCoopers recently noted that in 15 years, Brazil's largest city San
Paulo will be one of the most important cities in the world in terms of consumption.
Brazil has a vast amount of natural resources, in particular, hydroelectricity,
oil, biofuels and hydrogen. From an energy perspective, it is completely self-sustaining,
and then some. The country's entire electrical grid is run on hydroelectric power. Ethanol is
as easily attainable as gasoline, and the price of gasoline is not dependent upon futures trading.
In addition, Brazil has a large, educated workforce from world-class universities. They
are not just skilled technicians, but also leading innovators.
Figure 1. Brazil vs. Organization for Economic Cooperation and Development (OECD)
As shown in Figure 1, today, only 1.9 percent of Brazil's gross domestic product
(GDP), or about $6 billion, comes from the manufacture of electronic products,
compared to about 12 percent in most other developed countries. In comparison
to the $1.6 billion derived from electronic products in Brazil in 2001, this figure
indicates increasing growth for the country. Brazil is dedicated to growing the electronics
industry at an even faster rate, and has enacted significant incentives, including
free trade zones, to attract technology companies.
So far, much of this growth has come from assembly-type operations created by
Asian companies using imported parts. Brazil is intent on growing a domestic
electronics manufacturing industry. To propel this effort forward, Brazil's
government seeded CEITEC S.A., a fully integrated semiconductor design, research
and development (R&D), manufacturing and marketing organization that is already
delivering high-value radio frequency (RF) and mixed-signal semiconductor
products directly to the Brazilian and South American marketplace, with a strategic plan
for growth into world markets. Federal, state and local support for CEITEC S.A.
totaled more than R$300 million at the end of 2009, with additional investment
expected to enhance market growth.
Three markets currently targeted by CEITEC S.A. include radio frequency
identification (RFID), wireless and digital multimedia. There is strong demand
in South America, for example, for RFID technology as a means to fulfill
international requirements to track beef production throughout the lifetime of
the livestock. Wireless networks such as Worldwide Interoperability for Microwave
Access (WiMAX) and digital multimedia products including DTV are expected to
grow at a tremendous rate due to the rapidly expanding middle class—not only in Brazil,
but throughout South America. And as the region grows, the need for industrial,
electronics-based automation products will present yet another expanding market.
There are other applications unique to South America that make a strong case
for a regional semiconductor industry. For instance, governments throughout the
region can utilize RFID technology to better track the movement of automobiles—including whether their owners have paid traffic fines, which has become a growing
problem as more people move into bustling urban areas. Similar uses have
been identified, as airports, hospitals and industrial transportation systems continue
to expand. In fact, Brazil is intent on using technology such as electronic passports to
increase the efficiency of its public safety programs as it moves into a world-class
economy.
As seen in other regions, there is always risk in being the first player in a
market. CEITEC S.A. has managed this risk largely by virtue of a highly educated
and experienced Brazilian and American workforce; a well-executed strategy; deep
understanding and support of intellectual property (IP) needs; and a quickly growing
market.
To ensure a continued roadmap for success, CEITEC S.A. has created strong
industry alliances with semiconductor industry leaders. These alliances were
instrumental in ramping CEITAC S.A.'s first 0.35μm engineering and development
fab in 2009.
To help meet the expected demand for future production in the region,
CEITEC is aggressively recruiting many employees from the U.S. and Europe for
several hundred engineering management positions. In addition, the company expects
to adopt a fab-lite strategy by utilizing the services of the foundry partners within its
alliance.
Is the South American electronics opportunity "plug-and-play"? Perhaps not,
but it's certainly closer to that experience than found anywhere else in the world.
Culturally, Brazil is more similar to North America than any other region outside of
Europe. The language barriers are not as great as might be expected, government
incentives and infrastructure are already in place, and energy and human resources
are abundant. But most importantly, South America is primed to grow like no other
market in the world.
About the Author
Eduard Weichselbaumer is a senior executive with more than 25 years of international
experience in the semiconductor, IP and electronic design automation (EDA)
industries. He has served in chief executive officer and vice president positions of publicly
traded companies and start-ups. Eduard started his career at Fairchild in product
marketing. He went on to be a founding member of LSI Logic in Europe and employee
number 100 worldwide. In Silicon Valley, Eduard served as chief executive officer of
Pacific Silicon Technologies, a semiconductor IP company. Eduard held positions as vice
president of worldwide sales and divisional officer at Artisan Components and vice
president of business development at Virage Logic—both public companies. Most
recently, Eduard served as chief executive officer of SOISIC, with headquarters in
Grenoble, France and design centers in San Jose, California. SOISIC is a process and
IP company for advanced SOI processes. In his capacity, Eduard brought the company
from successfully raising funds to agreements with major foundries such as TSMC, UMC
and IBM. As a result, ARM acquired SOISIC at the end of 2006. He holds a
master's degree in electrical engineering from Munich Technical University and an MBA
equivalent from Siemens Business School. He has operated businesses in Europe, Asia and
North America. Besides his native languages, German and English, he speaks fluent
Portuguese. For more information about the Brazilian market or CEITEC S.A, please
contact Michele Kinman at 408-241-7449 or
michele.kinman@wmc-marketing.net.
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