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New Kingpo Group and ADATA to increase investments in Brazil

Taiwanese technology companies New Kingpo Group and ADATA plan to raise investments in Brazil

New Kingpo Group CEO Simon Shen (second left), President of ADATA Shalley Chen (front left), and government officials.

New Kingpo Group CEO Simon Shen (second left), President of ADATA Shalley Chen (front left), and government officials. (Taiwan News photo)

TAIPEI (Taiwan News) — Despite a stagnant economic outlook, Brazil continues to attract investments from Taiwanese companies including New Kingpo Group (NKG) and ADATA Technology (ADATA), due to local government incentives that encourage companies to move manufacturing to the Latin American country.

In spite of the International Monetary Fund (IMF) slashing Brazil’s anticipated GDP growth to 0.2 percent for 2017 in January, Taiwanese companies’ outlook for the Brazilian information and communications technology (ICT) market remains positive.

"We expect ICT demand to remain strong in Brazil, especially among first-time buyers,” wrote Director of Calcomp Tarzan Lee in an email response. “There might be delayed replacement cycles for new products, but overall we uphold a positive long-term outlook for the local ICT industry.”

Calcom is a subsidiary of NKG that formed a NAND Flash joint venture with Taiwanese company Phison Electronics in Brazil in September 2015.

NKG has started test production of NAND Flash products in November at its Brazil factory, and expects to enter mass production phase by the third quarter of 2017, said the group’s CEO Simon Shen (沈軾榮) at the “Brazilian ICT Innovation Ecosystems: New Business Opportunities Conference.”

“It is a misconception that Brazil is only an agricultural export country,” he said. “Brazil’s technology industry is fairly advanced.”

The group has two factories in Manaus, the capital city of Amazonas state in northern Brazil.

Manaus government incentives for local assembly, as well as a large talent pool and established semiconductor ecosystem, such as the presence of Samsung and Sony, attracted NKG to invest.

The Brazilian government also encourages collaboration between academia and industry. “Taiwan’s government should learn from Brazil,” said Shen.

The world’s second largest semiconductor module manufacturer, ADATA, also intends to increase expenditures at its fabs in Brazil in the near future.

"Spending in the local assembly is valuable and desirable strategy,” said ADATA Senior Director Max Liu (劉仲宏).

The company will prioritize spending on R&D, production and sales network in Brazil in the near future, said Liu, who did not disclose exact figures.

The Taiwanese memory and storage manufacturer submitted two applications to the Taiwan bourse to issue shares to increase capital in its Brazilian subsidiary, ADATA Integration Brazil S/A, by nearly 100 million Brazilian Real (US$32.37 million) last year.

ADATA also opened its first IC packaging plant in São Paulo in December 2016, and pledged to invest US$80 million over a period of three years to create 830 jobs, said Liu.

The new IC packaging plant is expected to start production in early 2017, according to a statement by Investe São Paulo.

In Liu’s presentation, the new plant took two years to build and is mostly involved in frontend manufacturing of the semiconductor process, such as wire bonding, die bonding and molding.

The company plans to diversify its products in Brazil in the future by developing biotechnology, audio technology, electrical and mechanical engineering.

The costs and long distance to ship products from Asia to Brazil was cited by Shen as one reason more Taiwanese companies were moving manufacturing to the country.

However, one obstacle manufacturers need to overcome is Brazil’s complicated tax and legal system that comprises federal, state and municipal levels.

“Brazil has at least 18 types of tax, and a corporate tax of 68 percent,” commented an attendee at the forum.