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Brazil, too, wants to be IC design hub

Posted: 16 Oct 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Brazil IC industry? design center? DTV?

There is a saying among suppliers of semiconductors and other electronic products to the booming Brazilian market: "Miami is Brazil."

The reference is to the percentage of foreign-made chips and other products that are shipped from Miami in the United States into Peru and then illegally smuggled into Brazil. Smuggling, of course, is a way to avoid import duties, which for products like semiconductors can range from 5 percent to 10 percent in Brazil, according to analysts.

Even as Brazilian law enforcement has cracked down on smugglers, the government has embraced the idea that the world's fifth most populous nation must develop a domestic IC industry. There is a budding realization that meeting Brazil's growing demand for ICs by developing them within its own borders could both stem the tide of illegal chips and bolster the country's competitiveness.

Toward those ends, the Brazilian government has launched several programs to establish IC design centers, fabs and assembly plants. In June, the government unveiled a set of tax and other incentives to attract multinational chip makers.

The South American country's ambitious chip quest has been a series of steps forward and steps back. One major fab project, Companhia Brasileira de Semiconductores, has been delayed, reportedly after IBM Corp. withdrew its support, sources said. Another fab project, reportedly backed by Japanese investors, remains a question mark. And the Brazilian government so far has been unable to attract multinational chipmakers to build large-scale fabs in the nation.

But Brazil finally may have found the right IC blueprint. A government-backed entity, the Excellence Center for Advanced Electronic Technology (Ceitec), has launched seven IC design centers in the country and claims to have taped out Brazil's first "homegrown" chips.

Ceitec is also putting the finishing touches on what could be the nation's first semiconductor front-end wafer fab. The group is building a small-scale, 6-inch prototype fab in Porto Alegre, the capital of the state of Rio Grande do Sul. The fab is expected to begin production in 2008.

IC Brazil Program coming
The design centers and fab are part of the IC Brazil Program, a strategic effort funded by the Ministry of Science and Technology, a Brazilian government agency. The IC Brazil Program, in turn, is part of the National Microelectronics Program, launched by the government in 2001. The stated goal of that program is to develop a domestic microelectronics industry.

The government group hopes to spawn homegrown chips.

Nearly every multinational cellphone and PC vendor has a production base in Brazil. But, thus far, the country's domestic IC industry remains far behind those of such other emerging electronics centers as China and India, said Bill McClean, president of IC Insights Inc.

Given the capital requirements and barriers to entry, there is little or no hope that a Brazilian-backed entity!or a even multinational!will ever build fabs in that nation, McClean said. So Brazil should look elsewhere for its place in the semiconductor landscape. "Design is not a bad way to go for Brazil," he said.

Simply put, Brazil's IC industry is in its infancy. Brazil lacks capital and IC design talent, but the nation does boast low labor costs, comparable to those in China. On the downside, Brazil also still has the reputation of having little or no IP laws, and it demands import duties for chips and raw materials.

To date, Brazil does not have a wafer fab in production, but the nation has a smattering of IC design centers, as well as two discrete-component suppliers, including Brazilian company Aegis Semiconductors Ltd and Germany's Semikron International GmbH.

Brazil has only one IC assembly plant. In 2006, Smart Modular Technologies Inc. opened a memory-packaging operation in Atibaia.

Still, Brazil is slowly finding its niche in the semiconductor landscape. "From an IC design point of view, Brazil has all of the pieces in place," said Armando Gomez, technology director and country manager for Freescale Semiconductor Inc.'s Brazilian subsidiary. Freescale is one of the few multinationals with an IC design center in Brazil.

While Brazil cannot compete with the likes of India in IC design, the country is capable of "developing chips for specific applications," said Jacobus Swat, a director at Centro de Pesquisas Renato Archer (CenPRA), a government-backed research organization. CenPRA has an IC design center as well.

The Brazilian government has embraced the idea that the world's fifth most populous nation must develop a domestic IC industry.

"In the next five years, Brazil will have fabs," predicted Alan Marten, vice president and general manager of the memory business unit at Smart Modular. "The question is, who will be the first to build one?"

Without a doubt, Brazil boasts a booming economy. Information technology spending in the country is expected to increase from $20.5 billion in 2007 to $32.3 billion by 2011, according to research firm IDC. Brazil accounts for 46 percent of the total IT spending in Latin America, followed by Mexico (23 percent) and Argentina (6 percent), according to IDC.

In 2006, PC sales in Brazil increased by more than 23 percent. There are said to be 93 million cellphone users in the nation. Dell, Hon Hai, IBM, Motorola, Nokia, Smart Modular and other multinational companies have production bases in Brazil.

There is good and bad news on the semiconductor front. Brazil's IC market is growing faster than the overall average and is expected to increase by 20 percent to 25 percent in 2007, said Luiz Castro, sales manager for Arrow Electronics Inc.'s Brazilian subsidiary.

The bad news: Brazil must import the vast majority of its semiconductors and raw materials.

The nation imported $3.3 billion in semiconductors alone in 2006, up from $1.6 billion in 2001, according to Brazilian Electrical and Electronics Industry Association.

As a result, the Brazilian government has come to a harsh reality: It must control its own destiny and develop its own IC industry. But it hasn't been easy to get an IC industry off the ground.

For example, in the 1990s, SIG, a now-defunct Brazilian TV maker, acquired an old fab from RCA and decided to set up a foundry company. But the ill-fated effort had some "bad luck" and went bust before it could get off the ground, sources said.

In 1998, a major IC design wave started in Brazil when Motorola took a gamble and opened up an operation there. Today, Freescale, spun out from Motorola, boasts 170 employees in the country, many of whom help design the company's analog devices, MCUs and embedded memories.

Brazil is moving toward domestic development capabilities for custom ASICs and intellectual property, such as MPEG devices and telecom chips, according to Gomez.

Ceitec plans to open Brazil's first semiconductor front-end 6-inch wafer fab in Porto Alegre, with production set to begin in 2008.

Besides Freescale, there are eight or so entities that design ICs in Brazil, including Ceitec, the Swiss Center for Electronics and Microtechnology Inc. and the Wernher von Braun Center for Advanced Research.

Ceitec was launched by the government in 2000. In 2002, Freescale transferred some technology and donated equipment to the group. Thus far, Ceitec has spent some $100 million on its fab, which is expected to be completed in spring 2008. The fab will be capable of making 4,000 6-inch wafers per month. It is targeted to make chips at 0.6?m to 0.18?m geometries.

The government entity has 30 employees involved in IC design. The goal is to expand to 100 employees within the next two years, said Sergio Souza Dias, president of Ceitec.

Ceitec also recently announced the Altus GBL chip, said to be one of Brazil's first homegrown IC designs. The ASIC device is geared for industrial automation applications, Dias said. Until the fab is completed, the ASIC is being made on a foundry basis by X-Fab Semiconductor Foundries AG.

DTV project
Ceitec is also designing a modulation chip for Brazil's DTV standard. And it is working on an RFID chip for Brazil's Innalogics, a developer of embedded and mobile systems.

Whether or not Brazil can continue to advance its fledgling IC industry!and halt illegal smuggling!remains to be seen. "The government has cracked down" on smuggling, said Smart Modular's Marten, though the illegal practice still goes on.

At the same time, Brazil faces an uphill battle in luring multinational chipmakers to invest in the country. Brazil must compete for projects against the likes of China, India, Vietnam and other nations, many of which provide attractive incentives.

Going forward, Ceitec's Dias suggests that Brazil is ripe for IC design!and fabs. "I don't believe Brazil will have thirty 300mm fabs," Dias said. "The idea is to have some fabs and many design centers."

- Mark LaPedus
EE Times




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