US firm Smart Modular betting on Brazil for semiconductor production

US firm Smart Modular, one of the largest companies in the electronics and semiconductor sector, is investing 150mn reais (US$31.5mn) to expand production in Brazil to meet increased internal and external market demand and produce components for IoT and smart grids.

Despite the semiconductor sector crisis, the company was able to serve the market during the pandemic with very little impact, Smart Brasil CEO Rogério Nunes told BNamericas.

“We have solid relationships with our suppliers. We have a long-term contract with them, in a very stable relationship, and we forecast demand with a long-term vision of at least three years,” the executive said about the supply woes.

Smart Modular produces memory solutions such as DRAM memory modules, solid-state drives (SSD), and flash-based removable and embedded electronics. In Brazil, the company has been present for around 20 years.

Last week, the company opened its ‘new’ Brazilian factory. The expansion is part of investments of 150mn reais over three years to boost capacity, diversify the portfolio of solutions and resume exports.

Located in the tax-free zone of Manaus, in Amazonas state, the plant has capacity to produce up to 5mn DRAM memory modules, 1.5mn SSDs and 500,000 connectivity modules.

The amount adds to current output of 20mn memory integrated circuits a year at the plant.

The company also expects to generate 160 direct jobs in Manaus. Smart Modular also has a factory in Atibaia, in São Paulo state, more focused on semiconductors, which has already received 1.5bn reais of investments.

In IoT, the company is targeting connectivity modules applied to sensors for the energy, gas and water smart meter market, Nunes said.

Other investments in its Brazilian operations are planned in the next three years, including through strategic partnerships with public and private R&D institutes.

The company, however, does not master the entire semiconductor cycle, being responsible mostly for the encapsulation of the modules.

“Some of our products can be used by final goods factories. There are no electrical and electronic companies of this type in the southern hemisphere. It exists in Argentina, but is limited. I need to export to where cellphones and computers are manufactured,” said Nunes.

According to Nunes, Smart Brasil is mainly targeting the US and Europe with exports of some of these products, taking advantage of any gaps left by Chinese and Russian suppliers amid geopolitical disputes and sanctions.