With a shortage of chips, the Chamber wants to benefit the national industry until 2029 – Legislation – Tecnoblog

The Chamber of Deputies urgently approved this Thursday (4) the extension of the benefits of the Support Program for Technological Development of the Semiconductor Industry, or Padis. The initiative would grant tax incentives to the memory chips and LCD and plasma displays sector until January 2022. Now, with the vote in Congress, the exemption should last until December 2029.

Shortage of chips: Padis effects are extended by the House of Representatives (Image: Niek Doup/Unsplash)

The vote on the Bill that extends the benefits of Padis was calm in favor of approval: the score was 315 to 10. The urgent proposal is authored by federal deputy Vitor Lippi (PSDB-SP).

Padis wants to make Brazil competitive in the semiconductor sector

Last month, Congress had already debated the extension of Padis with representatives of the semiconductor industry. For businessmen, the measure is important to expand Brazil’s participation in the electro-electronic components market.

On the occasion, the president of the Brazilian Semiconductor Industry Association (Abrasemi), Rogério Nunes, said the program seeks to “create a cost balance” between Brazil and other players in the memory chips and LCD and plasma displays market. Some of the biggest names in the industry include China, Singapore, USA, Taiwan and South Korea.

Padis was created in 2007, during the Lula government. But a decree published in February 2021 by current President Jair Bolsonaro updated the rules of the program that gives tax benefits to the semiconductor industry in Brazil.

The ordinance published by Bolsonaro in January changed some Padis rules that were not accepted by the WTO (World Trade Organization). They contradicted some trade agreements to which Brazil is a signatory.

In April, Bolsonaro signed a new decree involving Padis. But this time, the president determined that the benefit of reducing the 0% rate of the IPI (Tax on Industrialized Product) for all companies registered with Padis would end on January 22, 2022.

Padis beneficiaries should earn R$ 4 billion

Nunes emphasized during the debate in the Chamber that the exemption from payment at the IPI rate is necessary for the Research and Development (R&D) division of companies:

“The elimination of these incentives would increase by 20% the costs with inputs, domestic and imported, and by 40% the costs with the acquisition of machinery and equipment. With that, investments in research and development (R&D) would become just a burden for companies.”

According to a survey by Abrasemi, the 20 companies benefiting from Padis should earn R$ 4 billion in 2021. They have already invested around US$ 2.5 billion, something around R$ 14 billion, and hired more than 2.5 thousand employees. The payment within these companies is above the average for the sector, with salaries 2.5 times higher.

The government representative at the debate and Secretary of Innovation at the MCTI (Ministry of Technology, Science and Innovation), Paulo Alvim, supported the extension and expansion of Padis until the end of 2029. “We imported US$ 5 billion in semiconductors. It is fundamental, for us to have sovereignty in technology, that we strengthen programs like this one”, said the executive of the folder.

The Minister of Technology, Science and Innovation, Marcos Pontes, also met with entrepreneurs in the semiconductor sector and with the deputies who created the bill to extend the benefits of Padis.

Chip shortage affects Apple, Intel, Nintendo and others

The world is experiencing a shortage of chips that affects major manufacturers in the technology sector. Companies like Apple, Intel, Qualcomm and Samsung were affected, with the decrease in inventory of some consumer electronics products. Newly released items such as the iPhone 13 line are already feeling the brunt of the lack of semiconductors.

The latest victim of the chip shortage, however, is Nintendo. The Japanese manufacturer must reduce production by 20% of its main console, the Nintendo Switch, due to the lack of components — this should affect the performance of the company’s Christmas sales.

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