Chip factories – a geopolitical struggle

Image: Johannes Plenio


The evolution of disruptive digital technologies is strongly determined by advances in semiconductors

The knowledge society is identified as the era of the fastest changes and transformations in history, as structural changes are underway, both in tangible and intangible assets, those arising from knowledge, the mastery of technical tools and the conversion of innovation into value for organizations and the community.

The evolution of the disruptive digital technologies of our time is determined in such a way by the advances in semiconductors, which are present in all electronic devices, offering answers from everyday issues to the most complex issues of relationships in society.

Mastering its knowledge, its mechanisms and its factory production are important economic and geopolitical values, and also a matter of national security, as shown by countries and regional blocs. Especially at this time of enormous global contention over the direction of semiconductor manufacturing, swelled as they were by the crisis of the lack of chips on the world market.

This reality was amplified by two episodes that occurred almost simultaneously. The first, the period of Covid-19, which with its pandemic and dramatic picture, catalyzed these reconfigurations and disputes, leading to the closure or reduction of production of the largest plants of these devices in the Asia Pacific, at the same time that increased the home office. The second, Russia and Ukraine, major suppliers of inputs for the production of semiconductors, had to turn their efforts to the warlike conflict.

It is in this context that the United States of America, which in the 1970s held almost 70% of the market revenue in the area, today has less than 20%. This fact led them to approve US$ 280 billion in public subsidies to advance Research, Development and Innovation, in more technology-intensive sectors, in order to be able to attract new factories. Above all, to reduce dependence on East Asia, which currently supplies 80% of the global market, bearing in mind that China and countries in the European Union have also announced ambitious investments in this field.

In Brazil, the semiconductor factory Centro Nacional de Tecnologia Eletrônica Avançada – CEITEC – started operating in 2012, in the state of Rio Grande do Sul, as a result of a wide concertation of what is called the “Quadruple Helix” – governments, academia, businessmen and society – which benefited and was sustained by the combination of two structuring factors:

On the one hand, the initiative for a set of government incentive instruments, demanded by entrepreneurs in the electronics field, who wanted the country to have a State policy for the integrated circuit industry. Where they stand out: the Information Technology Law (1991); the sectoral study carried out by the National Bank for Social Development (2002); the National Microelectronics Program (2002), which gained a strategic place in the Industrial, Technological and Foreign Trade Policy (2004); associated with CI Brasil Programs (2005); the Support Program for the Technological Development of the Semiconductor Industry (2007), the Science, Technology and Innovation Action Plan for National Development (2007 – 2010); to the Productive Development Policy (2008) and the Greater Brazil Plan (2011).

Precisely, at that moment when the factory was being decided on, there was a local initiative by the municipality of the capital of Rio Grande do Sul, called “Porto Alegre Tecnópole”, with the support of Universities and their research centers, which studied the regions of the city with the greatest technological potential for attracting of investments based on the new economy, that is, intensive in technology and innovation, which was also added to the instruments above.

On the other hand, after the implementation of the project, the architecture of its governance process, its planning, the beginning of management, factory operations and the entry into commercialization of the company's products, the project followed what is called a "learning curve". and maturation”. Empirical-scientific evidence, internationally recognized, which shows that Cases similar in other places in the world, took at least ten years to pass the status of revenues greater than expenditures.

And when results began to appear and technical studies pointed to a surplus of BRL 13 million for the year 2024, mainly because it would be in full condition to deliver its already recognized products, such as: animal identification, smart cards, bracelets, Tags in vehicles, baggage identification, logistical controls, drug control sensors and the so-called “chip of the passport”, came the compensatory government commission from the Mint, in 2017, for this last device. Which after development and obtaining international certification, was ready to go into production. But behold, the assignment was inexplicably interrupted, which certainly compromised this possible surplus condition.

And to the astonishment of sectors of Brazilian society and even outside the country, while the world invests to set up factories of chips as part of its geopolitical and commercial strategies, the government published in the Official Gazette, in December 2020, decree No. 10.578, liquidating the company. Based on an expeditious self-reported cash flow in the Partnerships and Investments Program (PPI), which has no relationship with the numbers of the 2019 Goals and Results Compliance Report, nor the 2019 Management Report, much less the 2019 Administrative Report of the company, periodically issued by the Ministry of Science, Technology and Innovation. In addition to contradicting analyzes by specialists who predicted surplus results for 2024.

From which it can be concluded that, of two, one: either the Federal Court of Auditors, which has already pointed out irregularities in this process, now directs the removal of the liquidation of the PPI, leading the executive to annul the issued decree; or a new government will have the inexorable responsibility of preserving CEITEC, the only manufacturer of chips in Latin America, as a sovereign duty of the nation.

Only in this way, will we consolidate as a practice what all the great powers in the world want today, that is, to have the domain, the expertise scientific-technical and manufacturing learning based on the training and maintenance of highly qualified local human resources, in order to have independence in the sector.

And in an autonomous way, we can advance at least, in the reduction of the deficit of the Brazilian technological trade balance, having in the strategic horizon its discharge and the sovereign and definitive insertion of Brazil in the select world group of production of chips.

* Adam Villaverde is a professor at the Polytechnic School of PUC-RS.

*Livio Amaral He is a full professor at the Institute of Physics at UFRGS..

originally published No. GGN newspaper.

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