Brazil Tried to Protect Its Computer Industry

Brazil Tried to Protect Its Computer Industry

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in the 1980s Brazil had a large domestic computer industry dozens of brazilian-owned companies employing tens of thousands of Brazilians producing tens of thousands of Brazilian PCS in the 1970s a small set of Brazilian government bureaucrats recognized the growing importance of the computer industry and in a bold move they reserved the most exciting part of that industry exclusively for Brazilian firms these protections helped develop an industry but only for so long in this video we're going to review the Brazilian computer industry but first a quick reminder about the newsletter sign up for updates and new analysis the full scripts of selected popular videos and more the sign up link is in the video description below I try to put one out every week maybe two alright back to the show Brazil's first computer was imported of course in 1957 the city government of Sao Paulo imported a Sperry univac 120 to track water distribution the 120 had about 4 500 vacuum tubes and could do about twelve thousand addition and subtraction operations per minute just four years later in 1961 four students at the elite Technical Institute of Aeronautics called ITA slapped together Brazil's first domestically produced computer the zazinho they made it as a teaching tool a year-end graduation project rather than an industrial product and it shows built with 1 500 transistors the thing looked like a fridge without any doors and just barely worked after finishing the team went their separate ways another student team made some improvements to the zenzino in 1963. after which its precious transistors were cannibalized for spare parts by subsequent student teams the zanzin hoe only hinted at the talent and potential of Brazil's Engineers for instance another small group of researchers at the ITA had started to produce basic germanium diodes and transistors for aircraft building coal furnaces to extract the germanium this progress however abruptly came to a halt in 1964 when the military overthrew the democratically elected government and imposed a dictatorship the ITA became far more oppressively run and subsequently lost its academic reputation with many of the staff going abroad after the military dictatorship took over the country became friendlier to foreign Capital multinationals like IBM boroughs digital equipment and Honeywell entered the Brazilian data processing Market the market grew at a blistering 30 to 40 percent a year making the Brazilian computer Mark of the 12th largest in the world back then yet despite this there were many voices who wanted the government to do more many people including those in Academia and pockets of government pushed for a Brazilian computer industry first Brazilian electrical engineering professors wanted a robust domestic job market for their students IBM and Burroughs had manufacturing operations in Brazil but there were mostly low-level assembly operations there was no r d being done so many talented Brazilians would join a multinational only to find themselves doing menial sales or assembly tasks unbefitting of their abilities second every domestically made computer replacing an imported one helped preserve the country's precious foreign exchange Reserves third and most importantly there were National Security issues with relying on imported computers for military equipment and that was the way the domestic Advocates got their foot in the door in the late 1960s the Brazilian Navy purchased six frigates from the British firm vosper thornycroft these vospers frigates were fitted with sophisticated ferranti mini computers controlling their navigation and firing systems how would any Brazilian be able to fix such an English computer if it were to break this argument made a lot of sense and in 1971 Brazil's National Economic Development Bank and the Navy joined together to form a special working group informally known as the gorenis project the gorenas project announced that they would award a four million dollar tender to a university team with a domestic computer within four years one institution to try for the Brazilian Navy's tender was the State University of Campinas they started a project called the sisna Bronco or white swan the name is a reference to the Brazilian Navy's anthem the white swan would produce a mini computer kind of like the IBM 1130 but with more features like a 24-bit processor they garnered a lot of media attention because they had two American trained returnees on their team meanwhile on July 1972 the microelectronics lab at the University of Sao Paulo the laboratorio de systemas digitis psychedelically abbreviated to LSD set up their own project to compete with the white swan they called it the ugly duckling in a funny contrast with the white swan The Ugly Duckling was rough and practical everything from Hardware to software had to be built from scratch The Ugly Duckling was a box about one meter by one meter large and had about 450 chips it had much less memory than the white swan a four kilobyte magnetic core memory made by Philips which made it more difficult to program The Ugly Duckling might have been ugly but his construction was quite good and most importantly the LSD team like all real artists shipped after three years a new computer was presented to Brazilian officials despite an awkward situation when a photographer tripped over a wire and disconnected the whole thing they won LSD was given charge of the hardware while the pontifical Catholic University Rio de Janeiro worked on producing the software another goal of the goranis project was to found a company to produce the Navy's domestic process computers thus in 1974 bnde set up a three-way joint venture between itself the Brazilian firm ee Electronica and ferranti called computer Torres e systemas brasileros or cobra Cobra's first product was the Cobra 700 series a Brazilian assembled line of mini computers based on ferranti designs after that Cobra struck good technology transfer deal with a small American company called sitecore Inc after the larger data General declined their terms this created the Cobra 400 series of computers based on the scicor 440. Cobra then acquired the ugly ducking project now called G10 they merged the teams with two other university projects producing terminals the keyboard and monitor interfaces to create Brazil's first domestically designed and built mini computer the Cobra 530 of the Cobra 500 line despite these new products Cobra struggled to make money unable to meet the Brazilian Navy's product goals ee Electronica and ferranti quickly sold their stakes in The Firm Cobra needed help the Brazilian government has long directly intervened and developed its various Industries for instance protecting sectors like sugar salt and fishing or creating national champions in automobiles steel shipping and most famously oil computers in the IT industry are no different in April 1972 the government set up the Coordinating Committee for electronic processing activities or Capra its goals were to coordinate electronic processing activities in Brazil I mean that's what the name literally says in practice this meant managing the flows of computer Imports into the country Over time however they realized that they were also in an ideal position to help develop a domestic computer industry and say the then struggling cobra the 1970s were a decade of oil crises and Brazil imported 80 percent of its oil as the crisis worsened over the years Capra gained increasing political power to pursue their goals in December 1975 the government passed resolution 104 giving Capra new powers 104 said that All Imports of computers accessories and components had to be approved by Capra Capra promptly announced the import limit on all computers 110 million dollars worth in 1976 growing to about 130 million in 1978. IBM saw what was coming and made an impromptu Public Announcement that they would now sell Brazilian assembled system 32 mini computers these were great computers at a very low cost and IBM quickly received 400 orders of Interest IBM's move would have been the death knell for Cobra which then relied on regular cash infusions from the Brazilian Development Bank were enough for what Capra did next in July 1976 Capra decided to split the computer Market into two IBM and boroughs can sell into high-end computers after all these were far more sophisticated than anything Brazil can offer but the burgeoning mini and microcomputer markets would be reserved for special firms to be chosen in a later competition this is similar to what India had done with ecil and their mini computer strategy at the same time Capra brought together a Consortium of 11 Brazilian Banks to recapitalize COBRA on the basis of bank computerization bnde and other government organizations kicked in a few more million these decisions were entirely made by Capra an administrative panel stock with nationalist-minded technical people Brazil's higher government hadn't been much involved Capra's decision was thus controversial many economic Elites including Brazilian business owners opposed the protectionist decision for economic efficiency reasons others agreed with the principle but felt that the multinational should at least be allowed to do joint ventures the multinationals brought immense political pressure to Bear IBM even met with Brazil's president Ernesto Geisel data General lobbied the American government to ban certain Brazilian Imports in retaliation but Capra was backing from the media held their Crown in 1977 they slammed the door on the big multinationals they chose just Cobra and four other brand new domestically owned firms to build mini computers Sid labo edisa and Cisco IBM and other American makers still dominated the traditional computer Market but nevertheless it was immensely frustrating to be locked out of the nascent mini computer Market Capra's actions had impressed the military perhaps a little too much the military decided that Capra had a little too much political Independence and that information technology was too important to be left in the hands of mere civilians in 1979 they intervened co-opting Capra with a new military-controlled body called SEI sei's ties to the military put somewhat of a chill on discourse they were authoritarian and acted somewhat arbitrarily monitoring and punishing people in the industry who didn't repudiate leftist ideologies regardless of their behavior however SEI largely continued kapra's policies reserving the market for domestic players and restricting Imports unless no suitable alternative was available though they did balance this in consideration of the needs of other parties for instance in 1980 they allowed IBM to manufacture quantities of the medium-sized computer model 4331 under certain conditions in the first half of the 1980s SEI oversaw a rapidly growing Brazilian domestic computer industry Brazilian firms gained 80 market share in the four years after 1978. Cobra was the largest Brazilian computer firm by far with 70 market share of the mini computer in 1980. they're domestically designed and

built Cobra 530 mini computer Mainframe the one based on the ugly duckling sold over 6 000 units at prices comparable to those from European providers but they weren't alone the next largest computer makers were itau Tech part of the larger ital group and Sid by 1983 there were 100 Brazilian computer companies employing some 18 000 people 1 200 of those were high paying r d jobs this was also the time of the PC Revolution powered by American-made microprocessors Brazilian 8-bit PCS or microcomputers were as competent as their larger mini computer cousins but in a far tinier package many of these PCS were reverse engineered clones of American computers like Sinclair apple and TRS cheap imported microprocessors allowed many companies like scopus to easily enter the industry and they were not all that backwards either at first domestically designed PCS like the pro logica cp500 were comparable to the 10d TRS microcomputers sold in the United States in the mid-1980s some of these were good enough to be exported in 1983 Brazil exported 26 million dollars worth of PCS compatible with the IBM PCAT standard I should note that despite the success none of these computer companies were internationally competitive nor particularly large the total capital of Cobra for instance in 1983 was just 15 million dollars nevertheless the market Reserve policy was judged to be a success and was renewed in 1984 with the 1984 informatics law like I said much of this computer boom relied on the availability of cheap but powerful microprocessors from America the 1980s saw the vlsi revolution which brought increasingly more of the whole system onto a single chip this plus the PC's open ecosystem made a far easier to assemble a PC but at the same time it sucked away value from the PC maker to the semiconductor maker Imports of these increasingly sophisticated semiconductors Grew From 63.3 million in 1978 to 95.6 million in 1981. so for the government it made sense to try for domestic semiconductor industry too in 1972 there was a largely government-funded startup Semiconductor Company called Transit semiconductor they collaborated with the University of Sao Paulo to build a Fab in the Brazilian city of Montes claros their plan was to First make diodes and then linear and digital integrated circuits but Transit failed to produce good quality diodes perhaps due to insufficient knowledge transfer from the University they closed in 1980 due to Serious Financial issues by 1984 there were 18 semiconductor firms in Brazil however there was just one Brazilian owned firm doing anything more than low value assembly Sid considering the small size of Brazil's market demand only 180 million dollars total in 1984 some consolidation made sense so in 1983 SEI attempted to follow its mini computer Market strategy for the semiconductor Market applying a market Reserve they selected three domestically owned semiconductor companies Sid itau Tech and elibra to enter the larger semiconductor fabrication Market starting from back end processes and moving upwards there seemed to have been some successes there were even some car radios exported with domestically designed and fabricated Brazilian chips however bad financials and changing conditions in the 1990s ended this Brazilian foray into semiconductors throughout the 1980s Brazil's domestic computer industry started to seriously lag behind that of the rest of the world traditional mini computer makers like Cobra were badly hit by the PC Revolution they needed to migrate to more powerful models with 32-bit processors called super mini computers which is what other mini computer makers abroad had done in 1983 Cobra began developing an indigenous 32-bit workstation design based on the commercially available Motorola 68000 microprocessor other Brazilian mini computer makers like Libra computer Doris took a different path licensing an older vax 750 design from digital Equipment Corporation but those makers were limited because of course the foreigners won't license them their best designs in the end the biggest winner of the super micro Market was IBM which as I mentioned earlier was selling its medium-sized 4331 computer their market share doubled from 1982 to 1984.

by 1983 the Brazilian mini computer makers were selling less systems than what they had four years earlier they had gotten themselves caught between IBM above them and the PC makers below and ended up with nowhere to go compared to the declining mini computer makers the Brazilian PC makers seem like The Shining Jewel with over 50 share of the market but by the late 1980s the Brazilian PC makers lagged their foreign competitors in performance and cost technical performance wise they lag by about three to five years and in cost a PC in Brazil cost 70 to 100 more than what a comparable model would cost in the U.S though I should note it was only 15 to 25 percent more than what prices were in West Germany then this cost difference is attributed in part to the higher cost of raw Goods like copper and chemicals for pcbs non-semiconductor electronic components cost two to five times more in Brazil than in the rest of the world and in larger part to the lack of scale of these small Brazilian firms in 1989 the leading Brazilian PC makers produced 20 000 PCS taiwan's Acer did 400 000 by itself the manufacturing process lacked significant automation particularly when it came to the pcbs the most prominent sign of the effect this technological and price lag had on the market was how many people sought import or black market alternatives for computers large buyers like big businesses and the government cannot avoid the trade barriers and had to import but despite the fact that the import process took a long time and required a lot of paperwork they were disgruntled enough to deal with it for a foreign alternative small buyers on the other hand could resort to the black market and smuggling by 1991 the black market was estimated to have provided 65 percent of all Brazil's PCS large industrial players in Brazil's other Industries started complaining that the market Reserve was a costly subsidy Economist calculations pegged it to be 20 to 33 percent of the computer's market price such as subsidy was easier to swallow during Brazil's boom boom economic years but this took place amidst a general economic malaise times weren't so ebulent as before unemployment in Brazil topped 25 in 1987 inflation that year was 366 percent the late 1980s saw the computer industry's growth rates rapidly decelerate from 30 percent to around 10 percent a year Brazilian manufacturers were concerned about how the indigenous technology Gap impeded their own competitiveness abroad particularly when it comes to computer-controlled Manufacturing externally there was plenty of pressure from foreign governments as well particularly the United States at the time the U.S was Brazil's largest trading partner accounting for 23 percent of total export sales and 16 percent of non-oil export sales considering Brazil's High foreign debt at the time interruption in these sales would not be ideal most foreign observers had hope that Brazilian democratization would loosen the market controls but when the Brazilian government renewed The Market Reserve in 1984 there were loud protests from the multinationals particularly the American ones a year after the 1984 informatics law the Reagan Administration filed an investigation on its own accord trade talks went back and forth for several years touching on aspects of both software and Hardware I don't think serious sanctions were ever imposed on Brazilian Goods but American threats of doing so like one memorable 1987 announcement from Reagan spurred the Brazilians to keep negotiating these internal and external pressures made a time for a change in 1990 president Fernando calor de Mello became Brazil's first democratically elected president after the end of the military dictatorship one of the policies he ran on would be liberalization of the Brazilian I.T markets he followed through on his promises within five years Compact and IBM became two of the top three PC makers in Brazil production and import surged has Supply adjusted to meet Brazil's large domestic PC market demands large PC makers like Dell and Gateway entered the market taking over local firms and opening local factories several Brazilian computer makers survived either by working in specific niches like banking or the military Cobra for instance is today owned by the bank of Brazil now renamed to BB Technologies and services we should first celebrate the achievements of the Brazilian computer policy they navigated significant political challenges to craft and sustain a domestic computer manufacturing industry for 15 years in the aspects of National Security technological Independence and domestic employment I think Brazil managed to achieve what they wanted much of this was done without the help of foreign technology transfer agreements since many of the big multinationals declined to do it with them where the policy makers fell short was in efficiency and directional Focus potential PC makers who wanted to start a PC company had to go to the government which then only looked at the National Origins of the team's technology rather than their efficiency scale or Market size so Brazil's computer makers stayed home where it was safe the policy makers protected them for as long as they could but once those protections lifted due to political and economic reasons those companies had little chance of survival and that is the tragedy of the Brazilian computer industry all right everyone that's it for tonight thanks for watching subscribe to your Channel Sign up for the newsletter and I'll see you guys next time

2023-10-01 08:43

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