Brazil’s Senate approved the Brazil Semiconductors Program (Brasil Semicon), which marks a critical step in the country’s neoindustrialization. This program, detailed in PL 13/2024, is designed to invigorate the national semiconductor industry by promoting innovation, streamlining processes, and expanding the country’s role in global high-tech supply chains. With a comprehensive approach, Brasil Semicon targets every stage of semiconductor production, from research and development (R&D) to manufacturing, with a strong focus on increasing the competitiveness of Brazilian-made chips. These chips are essential components in a wide range of products, including solar panels, smartphones, and computers, making them a crucial part of the Industry 4.0 revolution.
Boosting Investment and Innovation
One of the core aspects of Brasil Semicon is its emphasis on research and innovation. The program encourages investments in infrastructure, automation, and technological upgrades across the entire semiconductor production chain. This includes the acquisition of both national and imported machinery, licensing and development of software for integrated process management, and expansion of R&D activities. The program also supports operational and administrative expenses, ensuring that companies can maintain their competitive edge in the rapidly evolving tech landscape.
In addition to fostering innovation, Brasil Semicon aims to simplify the existing regulatory framework to make it more responsive to the dynamic needs of the semiconductor industry. For instance, the program builds on the existing Programa de Apoio ao Desenvolvimento de Semicondutores (Padis), which offers tax incentives for the sector. Under the new legislation, Padis’ duration is extended to 2073, aligning it with the benefits granted to the Manaus Free Trade Zone. This extension is expected to provide long-term stability and predictability, encouraging more significant investments in the sector.
Moreover, the program introduces measures to enhance the effectiveness of these incentives without increasing fiscal concessions. One notable change is the removal of the requirement for a pre-approved list of inputs eligible for tax breaks, allowing companies greater flexibility in their operations. This change is particularly important for an industry that requires quick adaptation to technological advancements.
Regional Development and Export Potential
Brasil Semicon also places a strong emphasis on regional development. By increasing tax credits for companies in the North, Northeast, and Central-West regions, the program aims to balance economic growth across the country. This regional focus not only promotes innovation but also helps in reducing economic disparities within Brazil.
The program is also poised to significantly boost Brazil’s export potential. Currently, Brazilian semiconductor companies, which generate around R$5 billion annually and employ 2,500 people directly, are primarily focused on the domestic market. With the enhancements introduced by Brasil Semicon, these companies are expected to increase their participation in international markets. Notably, the program aligns tax credits with total company revenue rather than just domestic sales, encouraging firms to expand their global footprint.
Positioning Brazil in the Global Market
Brasil Semicon’s ultimate goal is to position Brazil as a preferred supplier in the global semiconductor supply chain. The program targets the “back end” stages of semiconductor production, such as chip encapsulation and testing—areas where Brazil already has significant expertise and infrastructure. By focusing on these stages, Brazil aims to solidify its role as a key player in the global market, especially for leading technology developers, including those in the United States.
Looking Ahead
The Brazil Semiconductors Program is a strategic initiative that not only aims to boost the domestic semiconductor industry but also to position Brazil as a global leader in high-tech manufacturing. With the Senate’s approval, the program now awaits the signature of President Luiz Inácio Lula da Silva to become law. Once enacted, the program’s guidelines and objectives are expected to be regulated within six months, setting the stage for Brazil’s enhanced role in the global semiconductor market.
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