South America analog semiconductor market is estimated to be valued at US$1.720 billion in 2020.
An analog semiconductor is a type of electronic component that may perform various tasks. It may create a signal or change signal properties like amplitude, phase, and frequency. Analog semiconductors are used for several applications, including automotive, medical equipment, and consumer electronics industries. South America is an upcoming hub for the semiconductor market. Owing to the new government incentives and support, it is expected to occupy a significant share of the semiconductor market. With new start-ups and entrepreneurs showing an interest in the semiconductor and technological field, along with the new government policies to help new organizations, the Latin American analog semiconductor market is anticipated to increase in size. However, due to the lack of proper infrastructure and supply chains among semiconductor firms, the analog semiconductor industry may face a downtrend in the market.
The outbreak of the novel coronavirus disease had a significant impact on the South American analog semiconductor market. The COVID-19 pandemic led to a massive uplift in demand due to the lockdown and social distancing regulations imposed by the government. This considerable surge in demand could not be fulfilled by the South American companies due to the disruption in global supply chains and markets, leading to many companies facing huge losses. Automotive and electronic industries were also affected by this imbalance in supply and demand, which also led to a decline in their profits. However, the market is recovering now, and with the recent advancements in technology and government incentives, the market is expected to rise.
Chile’s start-up revolution
Chile has become a paradise for start-up entrepreneurs. For companies seeking to boost their expansion, integration into overseas markets is critical. Chile's economic progress is largely reliant on the country's globalization. Since the inauguration of the Start-Up Chile program by the Chilean government, entrepreneurs have been drawn by the country's favorable economic climate, technological expertise, and government support to try out new products and ideas before moving on to the more lucrative U.S. market or expanding across Latin America. For international entrepreneurs at various phases of growth, the program offers a variety of options. Countries like Asia have played a crucial role in this environment, and commerce between Chile and the area has developed dramatically in recent years. The goal of this program was to turn Chile into an entrepreneurship hub for start-ups to foster and, in turn, uplift the economic scenario of Latin America.
Similar incentives and policies are also started in other parts of South America, such as Colombia, Argentina, etc., and are expected to influence the market positively.
Supply chain disruptions
Despite certain public and commercial endeavors, Latin America still lacks a viable and long-term semiconductor manufacturing industry. Due to pandemic-related remote work and social isolation, the electronics sector has witnessed a boom in demand, resulting in a supply-demand mismatch. Component scarcity has hampered production in various Latin American sectors, including electronics and autos. The worsening of the pandemic has intensified the shortage problem in Brazil, Latin America's largest economy. Toyota, Nissan, Volkswagen, Mercedes-Benz, Volvo, and Scania have temporarily halted operations in Brazil due to tighter lockdowns and a scarcity of components and chipsets. This is due to the increase in the cost of electronic components, which has become an issue since 2020, affecting all business sectors that employ them. Access to raw materials and equipment, such as fibre and optical cables, has been challenging for several Latin American companies. Many of these essential materials come from the Asian market, and relying only on this supply chain is becoming challenging.
Regional inconsistencies
South America lacks proper resources and infrastructure to help develop analog semiconductor manufacturers. Countries such as Brazil and Argentina have attempted but failed to develop a national semiconductor industry through state investment or private-sector incentives.
In 2015, CPQD, Brazil's largest R&D-focused ICT corporation, launched a joint venture with GigOptix, a US semiconductor company, and constructed the western hemisphere's first factory to manufacture sophisticated photonic chipsets. However, in 2017 the Joint Venture was cancelled, and the facility, which had received funding from the development bank BNDES, was shuttered before reaching mass production.
Qualcomm and Universal Scientific Industrial (USI), a subsidiary of the Taiwanese firm: Advanced Semiconductor Engineering, decided to build a US$200 million semiconductor facility in Brazil to manufacture 4G chipsets for smartphones and IoT devices. However, the plant took nearly 8 eight years to build, which exceeded the time limit by a long shot.
Other manufacturers like Ceitec have faced similar outcomes, failing several businesses.
Segmentation