US chip sanctions may push Brazil, others right into China's arms
For years, the United States has leveled waves of sanctions and export bans on Chinese firms in an effort to squelch the Middle Kingdom's fledgling semiconductor industry, all the while rallying allies.
Despite US efforts to discourage its friends and acquaintances from doing business with China, Brazil's foreign minister Celso Amorim has claimed the country can't afford to pick sides in the US-China chip war. As such, Lula is likely to face financial difficulty attracting US-aligned chipmakers to set up shop in Brazil. The facilities are not cheap to build, especially as rising inflation drives up the cost of materials. For context, Intel now expects each of its two Arizona fabs to cost roughly $15 billion, meanwhile TSMC will spend $43 billion on two fabs in the state. While they might work out cheaper to operate in a country like Brazil, it's safe to say, it wouldn't be that cheap.
"When you're building something out for the next five to seven to 10 years, you have to have stability," Morales said."You have to have infrastructure, and that's why most companies did not." Meanwhile, from Lula's perspective, courting Chinese technology has numerous upsides. Chinese investment in semiconductor manufacturing in the country will not only create jobs at home — something that's politically positive — but also has the potential to attract complementary business, and guarantees a steady supply of inexpensive semiconductors. The latter point isn't something that can't be taken for granted after the past three years of shortages.
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