MUNICH, Germany – The birth of the Brazilian semiconductor industry has been protracted and difficult but even as the infant takes its first steps it is facing an uphill battle.

Critics see outdated technology, an unclear business model and a domestic market too small to create a competitive chip industry. And the training that Brazilian engineers need to get close to industry best practice just serves to expose them to overseas opportunities. But against all odds, the Brazilian semiconductor industry is gaining momentum.

Workers are adding the finishing touches to the semiconductor cleanroom of Ceitec, Brazil’s first semiconductor front-end manufacturing line. Ceitec’s activities are part of a huge effort by the Brazilian government to modernize the nation’s economy. Since President Inacio Lula da Silva took his office in 2003, the Brazilian government has consistently invested in information technology and in semiconductor activity.

About $150 million went to Ceitec (Excellence Center of Advanced Electronics Technology) in the southern city of Porto Alegre. And last December the group licensed a 0.6-micron manufacturing technology from Germany’s X-Fab Semiconductor Foundries AG (Erfurt, Germany).

"Our equipment can handle 0.35 micron, and in about three years, we will be able to move to 0.18 micron," Ceitec President Sergio Dias said.

The chips produced are intended to serve the local market, at least initially, and target automation and machinery industry applications as well as the automotive industry. Even though Brazil offers large domestic demand for consumer and communications applications Brazil won’t be able to produce the chips required for these products, in the foreseeable future.