What Led to the Rise and Fall of the Brazilian Computer Industry?

The Rise and Fall of the Brazilian Computer Industry

• In the 1980s, Brazil had a burgeoning domestic computer industry with numerous Brazilian-owned companies employing tens of thousands of workers and producing a large number of Brazilian PCs. This growth was nurtured by the protectionist policies implemented by the Brazilian government, which reserved a significant portion of the industry for local firms. However, despite this initial success, the industry faced challenges and eventually faltered. Foreign multinationals like IBM, Burroughs, Digital Equipment, and Honeywell entered the Brazilian market, leading to a shift in dynamics. The lack of emphasis on research and development in domestic firms meant that many talented Brazilian engineers ended up in low-level roles within these multinational companies. Additionally, concerns over national security and the need to reduce reliance on imported technology further fueled calls for a robust Brazilian computer industry. The military dictatorship in Brazil also impacted the trajectory of the industry, leading to a decline in academic reputation and talent migration. The push for indigenous technology culminated in the establishment of the Gorenas project, aimed at developing a domestic computer for military use. This project symbolized the aspirations and challenges of the Brazilian computer industry during that era.

The Rise and Fall of the Brazilian Computer Industry

The Brazilian Computer Industry: A Tale of Competition and Government Intervention

• In the early 1970s, the Brazilian computer industry saw the emergence of two significant projects: the White Swan and the Ugly Duckling. The White Swan, also known as Sisna Bronco, aimed to create a mini computer with advanced features like a 24-bit processor. Meanwhile, the Ugly Duckling project, initiated by the Microelectronics Lab at the University of Sao Paulo (LSD), set out to compete with the White Swan by creating a rugged and practical computer from scratch. Despite its less memory and challenges in programming, the Ugly Duckling project successfully delivered a new computer after three years. Subsequently, a joint venture named Computer Torres e Systemas Brasileiros (COBRA) was established to produce domestic processing computers for the Brazilian Navy. The venture introduced the Cobra 700 series, based on Ferranti designs, and later collaborated with Sitecore Inc. to develop the Cobra 400 series. However, financial struggles persisted, leading to the acquisition of the Ugly Duckling project, now known as G10, to enhance product offerings. The Brazilian government's Coordinating Committee for electronic processing activities (Capra) played a crucial role by regulating computer imports and supporting the local industry. By the mid-1970s, Capra wielded significant political power and imposed restrictions on computer imports, prompting IBM to introduce Brazilian-assembled System 32 mini computers to comply with regulations. This move threatened COBRA's survival, reliant on financial support from the Brazilian Development Bank. In response, Capra divided the computer market into segments, reshaping the landscape of the Brazilian computer industry.

The Brazilian Computer Industry: A Tale of Competition and Government Intervention

The Technological Transformation of Brazil's Computer Industry

• In the realm of high-end computers, Brazil lagged behind other countries in sophistication. However, a shift occurred when the mini and microcomputer markets began to emerge. This change prompted the selection of specific firms through a competitive process, reminiscent of India's approach with ECIL and their mini computer strategy. A pivotal moment arrived when Capra, a key figure, orchestrated a Consortium of 11 Brazilian Banks to inject capital into COBRA, supported by bnde and other government entities. Capra's decisions, made alongside a panel stocked with nationalist-minded technical experts, stirred controversy. While some economic elites and Brazilian business owners opposed the protectionist measures for reasons of economic efficiency, others saw merit in the principle but advocated for allowing multinational corporations to engage in joint ventures. Multinationals like IBM and Data General exerted significant political pressure, even lobbying governments, yet Capra stood firm. In 1977, the Brazilian government selected only COBRA and four other newly established domestic firms to manufacture mini computers, shutting out major multinational corporations like IBM. This move reshaped the landscape, with IBM remaining dominant in traditional computing while facing frustration at being excluded from the burgeoning mini computer market. Capra's decisions resonated with the military, prompting their intervention in 1979 to establish a new military-controlled entity called SEI, aimed at overseeing the sector more closely. Despite SEI's authoritarian tendencies and scrutiny of leftist ideologies within the industry, they largely sustained Capra's policies of prioritizing domestic players and regulating imports. By the early 1980s, Brazil witnessed a surge in its domestic computer industry under SEI's guidance, with Brazilian firms capturing 80% market share by 1982. Leading the pack was COBRA, commanding a 70% share of the mini computer market with its innovative Cobra 530 mainframe. The industry burgeoned further, with the emergence of numerous Brazilian computer companies, totaling 100 by 1983 and providing employment to over 18,000 individuals, including 1,200 in high-paying research and development roles. This era also coincided with the PC Revolution, fueled by American microprocessors, leading to the development of competitive Brazilian 8-bit PCs that could be exported to global markets. While the Brazilian computer companies were not yet internationally competitive or financially robust, their significant progress underscored the impact of Brazil's market reserve policy in nurturing a burgeoning technology sector.

The Technological Transformation of Brazil's Computer Industry

The Rise and Fall of Brazil's Semiconductor and Computer Industry in the 1980s

• In the 1980s, Brazil saw significant developments in its semiconductor and computer industry. The country aimed to establish a domestic semiconductor industry to reduce reliance on imported technology. However, challenges such as financial issues and lack of expertise hindered progress. By 1984, there were 18 semiconductor firms in Brazil, but only one Brazilian-owned company was making significant advancements. The government attempted to boost the industry by supporting three domestic semiconductor companies - Sid, Itau Tech, and Elibra. Despite some initial successes, the Brazilian foray into semiconductors faced difficulties in the 1990s. Meanwhile, the domestic computer industry struggled to keep up with global trends. Traditional mini computer makers like Cobra faced challenges from the booming PC market. Brazilian PC makers initially thrived with over 50% market share, but they fell behind foreign competitors in terms of performance and cost. The lack of economies of scale, higher raw material costs, and limited automation in manufacturing processes contributed to the industry's decline.

The Rise and Fall of Brazil's Semiconductor and Computer Industry in the 1980s

The Evolution of Brazil's Computer Industry: From Protectionism to Liberalization

• In the past, large buyers in Brazil faced trade barriers and lengthy import processes when purchasing computers. Small buyers, however, turned to the black market and smuggling for affordable alternatives. By 1991, the black market supplied 65 percent of all PCs in Brazil. The government's market reserve was seen as a costly subsidy, affecting the computer market prices by 20 to 33 percent. Despite economic challenges in the late 1980s, pressure from foreign governments, particularly the United States, intensified. The American threats of sanctions pushed Brazil to reconsider its policies. With President Fernando Collor de Mello's election in 1990, Brazil witnessed a shift towards liberalizing its IT markets. This led to an influx of major players like Compaq and IBM, transforming Brazil's computer industry landscape. Local firms either adapted to niche markets or were acquired by foreign companies. The policy succeeded in establishing a domestic computer manufacturing industry, focusing on national security, technological independence, and domestic employment. However, inefficiencies in policy implementation hindered the industry's long-term sustainability.

The Evolution of Brazil's Computer Industry: From Protectionism to Liberalization

Conclusion:

The journey of Brazil's computer industry showcases the impact of protectionist policies, challenges faced by domestic firms, and the push for technological independence. Despite initial successes, the industry faced setbacks, reflecting a complex narrative of growth and decline.

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