What’s at stake for Brazil’s electric, electronics industry in 2025?

Brazil’s electrical and electronics industry is entering 2025 cautiously optimistic, with positive growth projections for sales, revenues, investments and exports but amid challenges involving taxes, imports, protectionist measures, among others.

The industry is expected to end 2024 with double-digit growth, more than making up for the 6% fall seen last year, and reaching 227bn reais (US$37.4bn) in revenues. 

The figures are from industry association Abinee, which brings together manufacturers from both the electrical sector, including components and players in generation and transmission, and the electronics sector, including smartphones, network vendors and telecoms providers.

“We had a good result in 2024, growing 11% compared to last year, which was not a very good year. We are effectively recovering 2022 levels,” Abinee president Humberto Barbato said during a press conference on Thursday.

All areas and segments covered by Abinee recorded revenue increases this year. The highlights are the informatics segment, which includes computers and tablets, but also hardware for datacenters, with projected growth of 14%. 

Another highlight is the segment of electrical and electronic components, projected to grow 29% this year. The electric generation, transmission and distribution area is expected to rise 10% in 2024.

Overall, the sector's physical production grew 10.2% in 2024, driven mainly by the performance of the electrical sector, according to Abinee.

Abinee projects more moderate growth for 2025. The entity forecasts a 6% increase in revenues and 5% in local production volume.

A projected slowdown in GDP growth and a series of commercial, geopolitical and macroeconomic uncertainties help explain the expected development.

Chinese imports

In the electric sector, a major challenge next year will be photovoltaic solar modules.

In 2024, Brazil saw a 218% increase in the number of imported modules, which come mainly from China.

By October, 405mn units had been imported, compared to 127mn in the previous year, according to Abinee, which is why the association backed a measure by the government to raise import tariffs on these products to 25%.

Abinee said the increase represented progress, but the tariff is still low compared to the global average of 40%.

“We believe that, for next year, this should have a greater effect. It was Abinee's request that there be an increase in import taxes,” Barbato said in response to a question by BNamericas.

“Under the previous government, we lost a photovoltaic module factory here in Brazil, precisely because it was almost impossible to compete with the Chinese,” he added.

Glauco Freitas, director of Abinee’s generation, transmission and distribution area and country manager of Hitachi Energy, said that the imported modules are subsidized and that the competition is unfair. 

“The local industry used to have a 16% share in this segment. In 2024, we had 0.5%. We know that the product is subsidized, and this kills the local industry,” Freitas added.

Furthermore, according to Freitas, since expansion of generation in Brazil will be mostly solar- and wind-driven, the country must promote the local industry to ensure “the permanence of investments.”

He also said that there is a commitment by local manufacturers to buy inputs and components from Brazilian companies, such as glass and aluminum frames.

Chinese investments are welcome, said Barbato, but China must be a business partner, creating joint ventures with local companies and with a long-term vision of investments in the country.

In 2024, China was the main source market for imports to Brazil, accounting for 47% of total imported electric-electronics goods.

Trump

Potentially higher import tariffs imposed by the incoming Donald Trump administration in the US are viewed with mixed feelings by the industry.

On the one hand, Barbato believes that Brazil could fill the gap China would leave if Trump increased restrictions on Chinese products. 

Freitas, on the other hand, worries that greater restrictions would lead China to direct its excess supply to Brazil – an exact repeat of what happened in the fiber optics segment.

Right now, the industry is in a wait-and-see mode, and Barbato said that during the first Trump administration, Brazil's trade with the US grew.

In 2024, the US was the main destination for Brazilian electrical and electronics exports, accounting for 26% of total exports.

Telecoms

In the telecoms segment, weak growth is expected for 2025.

Abinee projects smartphone sector growth of 3%, while the outlook is flat for the infrastructure segment, which includes antennas, towers and fiber networks.

In 2024, smartphone sector revenues grew 7% and telecoms revenues fell 4%.

Despite the growth, the local smartphone industry suffers from irregular and smuggled products, which, according to Abinee, is largely related to high taxes. Irregular phones are sold in Brazil at 40% below market price, the entity said.

In 2024, the share of the so-called grey market in the local smartphone sector fell to 20% from 25% in 2023, representing 33.1mn units. Abinee estimates that Brazil has lost 4bn reais in revenue in 2024 due to irregular and smuggled smartphones.

The entity, together with regulator Anatel, has targeted marketplaces such as MercadoLibre and Amazon to prevent the advertising of these irregular products. 

Abinee welcomes the debate at the supreme court about making big techs liable for third-party online content, including advertising, posted on their networks. 

Regarding the tablets, desktops and laptops segment, 14% revenue growth is projected this year. In terms of units, the number of tablets sold is expected to rise and desktops and laptops to fall.

“What we can expect for 2025 is growth in the networks segment of optical fibers, especially to power and connect datacenters. We have seen this with the arrival of new international fibers in Brazil in 2025,” Wilson Cardoso, former CTO at Nokia Latin America and head of Abinee's telecoms unit, said in reply to a question by BNamericas.

Datacenters and AI

The datacenter sector is expected to be a highlight in 2025. Investments in projects tend to continue to drive purchases of equipment, services and construction. But there are challenges, such as the tax burden on importing GPUs.

Abinee advocates a reduction in import taxes for these products because the local market does not offer an equivalent to high-processing GPUs.

Meanwhile, Mauricio Helfer, head of Abinee’s informatics department, said that the industry managed to obtain a reduction in taxes for high-capacity servers made in Brazil.

He added that local production costs were putting the industry at a competitive disadvantage compared to servers manufactured internationally.

The government is committed to announcing in the first half of 2025 broader tax benefits for servers and storage manufactured in the country, Helfer said.

Regarding AI, Abinee favors the bill to regulate the technology.

The bill has been criticized by the datacenter and tech sector because it includes mandatory remuneration of copyright content for the training of AI systems, which would impact investments in datacenters built for this purpose.