Chipmaker Intel (NASD: INTC) has announced plans to invest $152 million in Brazil over the next five years in research and development, the chip manufacturer said on Wednesday.The investment in Brazil is a strategic initiative for the Brazilian government, which has announced lofty plans aimed at increasing the country’s software output.
The investment will be twofold, targeting both increased headcount and resources internally, while also partnering with academic institutions in Brazil to fund research. The Brazilian government is expected to match Intel’s investment, Intel President Fernando Martins said. Last year, President Dilma Rousseff said the Brazilian government would spend at least $254 million to stimulate software development. Historically Brazil has been focused on commodity exports, which the country is seeking to de-emphasize as it continues to develop. The higher value technology jobs could cause economic growth to surpass current trajectories of a largely agrarian economy.
Brazil is important to Intel, currently standing as the firm’s third-largest market, Mr. Martins said. Additionally, its venture capital arm, Intel Capital, has long been active here, making its first investment in 1999. Since then, it has invested approximately $100 million in more than 25 companies, according to Dave Thomas, head of Intel Capital.
Although it is an aggressive plan, the company is far from alone these days as other technology giants have also recently bet on Brazil’s capabilities as a software and software solutions provider. Microsoft (NASD: MSFT) last November said it would open a research center in Rio de Janeiro, investing $102 million over up to four years. Also last year, tech giant Cisco (NASD: CSCO) said it planned to invest $508 million over four years.
Technology spend is on the rise across the industry and across the globe, as the industry struggles to cope with the rapidly changing tastes of consumers. As more consumers replace desktops and leverage mobile devices for their computing needs, Intel and competitor AMD are locked in a battle to capitalize on the new opportunities being created. Intel’s investment in Brazil will be an important one for the firm, as it continues its expansion into emerging markets that could offer more upside than it’s typical stronghold, the US and Western Europe. From Brazil’s perspective, the investment is also a welcome one. Once considered the next mega market, Brazil has thus far failed to transform itself at the speed it has desired. A burgeoning technology industry could change that quickly, bringing much needed jobs and income to the struggling economy.
