Microsoft pledges US$2.7bn in AI, cloud investments for Brazil

After announcing US$1.3 billion for Mexico, Microsoft has also pledged 14.7bn reais (US$2.7bn) to expand its cloud computing and AI infrastructure in Brazil over the next three years.

Announcing the investment in São Paulo, at the Brazil edition of the Microsoft AI Tour event on Thursday, CEO Satya Nadella said that the country was key to the company’s strategy in expanding its Azure and genAI infrastructure.

Brazil is approaching 5 million developers through the GitHub Copilot platform, he said, making it the second largest such base of developers in the world. Five million is also the amount of people Microsoft wants to train in Brazil with AI skills by 2028, Nadella added.

Brazil’s vice president Geraldo Alckmin, who is also minister of industry and trade, said at the event that Microsoft’s investment will help the country to meet data challenges and demands.

Alckmin also said that Brazil will be “the great protagonist of AI” because it has abundant and the “cleanest” energy in the world.

“In addition to clean energy and human resources, [we want to promote the industry with] credit for innovation,” Alckmin said on the sidelines when asked by BNamericas about high import taxes for critical AI and datacenter equipment.

Enterprises have said that the cost of importing GPUs for AI processing, added to the unit prices charged by manufacturers for these chipsets, makes Brazilian operations burdensome. Many companies cannot afford to buy equipment for AI processing.

This issue has been brought to the attention of the government by representatives of the datacenter industry, BNamericas learned, and Alckmin said officials were addressing the problem.

“If a company needs to import machinery and equipment that are not manufactured domestically, it may be granted an ex-tarifário. In other words, you eliminate the tax on these products,” said Alckmin in reply to a question by BNamericas. 

The ex-tarifário regime is a tax incentive that temporarily reduces the import tax on some goods that are not manufactured locally.

Dubbed Nova Indústria Brasil, the industrial policy announced by President Luiz Inácio Lula da Silva and implemented by Alckmin is largely focused on fostering local manufacturing and component production.

In total, Alckmin estimates that the country will see 100bn reais in private investments for digital transformation.

The amount includes around 15bn reais announced by Microsoft with further 85bn reais previously committed by the sector as part of the industrial policy's digital pillar.

Last week, AWS also announced 10.1bn reais in investments in Brazil, but over 10 years.

Additionally, development bank BNDES announced a 2bn-real datacenter credit line. 

FOOTPRINT 

Present in Brazil for 35 years, Microsoft built its largest regional infrastructure in the country, with two public cloud regions.

The company operates a major cloud region in São Paulo, dubbed Brazil South, with three availability zones. This region was launched in 2014. Brazil South is supported by a sub-cloud region in Rio de Janeiro (Brazil Southeast), launched in 2021. 

Microsoft is building datacenters in Hortolândia and Sumaré. These sites will add to the São Paulo cloud region.

The company is also planning a datacenter in Limeira, São Paulo state, as exclusively reported by BNamericas.

Local genAI customers include Bradesco bank, Albert Einstein hospital, and the central bank’s digital currency Drex.