Overview

The Brazilian Information Technology market (IT) was valued at $46.2 billion and is expected to grow 8.2% in 2022, according to a report prepared by the Brazilian Software Association (ABES).  Brazil ranks 10th in the IT world market and represents 40% of the Latin American market. Meanwhile, the total revenue of the telecommunications services market in Brazil should reach $45.76 billion in 2022, estimates a report by Frost & Sullivan.

Brazil’s 5G spectrum auction was held in October 2021 and raised approximately $8.5 billion. Deployment of 5G in Brazil could have a $1.2 trillion economic impact and an increase in productivity of $3 trillion by 2035, according to a recent study by Nokia and Omdia. Brazil possesses a mature policy and regulatory environment for the telecom sector. The National Telecommunications Agency (ANATEL) is the primary body responsible for regulating the sector.

5G spectrum winners were expected to meet various buildout obligations, including providing coverage to 26 capital cities and the federal district by July 2022, coverage to all municipalities with >30,000 inhabitants by 2029, 4G coverage to all towns with >600 inhabitants by 2028, deploying optical fiber network backbone or backhaul networks to municipalities with >20,000 inhabitants by 2025 and to municipalities with <20,000 inhabitants by 2026, deploying optical fiber networks covering federal highways, and deploying a private 5G secure network for exclusive use by the government. According to the International Data Corporation, a market intelligence company for the ICT sector, 5G will increase technologies like AI, big data and analytics, cloud, security, AR/VR, robotics, and IoT by generating over $25.5 billion in Brazil by 2025.

According to ICT industry association Brasscom, enterprise 5G and edge computing spending are likely to rise once 5G network services are introduced. Investments in data centers increased 17% year-over-year to $850 million, demonstrating strong demand for core Internet and e-services infrastructure. Brasscom also projects 2021-2024 investment in mobile and connectivity projects of approximately $86 billion. On the other hand, the primary effect of a potential year-long shortage of some components or goods will result in an increase in the cost of IT products.

Leading Sub-Sectors

 
Artificial Intelligence (AI)

The Brazilian Strategy for Artificial Intelligence (EBIA) aims to “contribute to the elaboration of ethical principles for the development and use of responsible AI, to promote sustained investments in AI research and development, to remove barriers to innovation in AI, to encourage Brazilian AI innovation and development in an international environment, and to promote an environment of cooperation between public and private entities and industry and research centers for the development of AI.” The global revenue generated by artificial intelligence software is expected to reach $62.5 billion in 2022, according to a Gartner report. The figure represents a growth of 21% compared to 2021, when global revenue was $51.5 billion.

Security

According to ABES, security services will total nearly $1 billion in 2022 in Brazil, representing a growth of nearly 10% since 2020. Security solutions (hardware or software) will surpass $860 million in 2022. The Institutional Security Cabinet (GSI) instituted E-Ciber, Brazil’s National Cybersecurity Strategy, which provides guidance on cybersecurity, cyber defense, critical infrastructure, confidential information, and protection against data breaches. There is significant demand for cybersecurity solutions within all industries, representing a particularly promising opportunity for U.S. companies.

Internet of Things (IoT)

According to a study prepared by the Brazilian Association of Internet of Things (ABINC) in partnership with ISG Provider Lens, the total number of connected devices in Brazil could reach 27.1 billion by 2025. According to the study, the market for services related to consultancy, implementation and managed services for the IoT has evolved and matured significantly since the publication of the Brazilian National IoT Plan.

Edge Computing

Edge computing is infrastructure modernization aiming to achieve greater efficiency through automation, process optimization, and cost reduction. According to a Brasscom report, the Edge Computing sector will experience an estimated growth of 16% per year between 2019 and 2023, mainly boosted by the advancement of 5G.

Cloud

Cloud is a key element in IT infrastructure. In 2021 SaaS (Software as a Service) solutions grew 6%, and PaaS (Platform as a Service) solutions grew 31.6%.  The private cloud model is growing, with an increase of 7.9% compared to 2021, totaling $540 million in Brazil. Portaria No. 9 regulates cloud computing for the federal government. 

Wearables

New wearable goods are always being introduced in an effort to anticipate trends and adapt to new consumer needs. This market is almost entirely based on retail sales to end users. A growth of 15.8% in units and 17% in value compared to 2021 is expected, according to an ABES study.

Opportunities  

By 2025, Brazil will be among the five largest markets in the world for smartphones, with approximately 200 million connections. The Government of Brazil (GOB) has conducted several studies to improve the ICT market and address challenges in Brazil’s adoption of its Digital Transformation Strategy.  GOB development of national strategies such as the National IoT Strategy, the National Defense Strategy, the National Cybersecurity Strategy, the Digital Governance Strategy, the National Entrepreneurship and Startup Plan, and the National Artificial Intelligence Strategy are designed to embrace the full potential of digital technologies to improve Brazilian productivity and competitiveness. 

The creation of Brazil’s National Semiconductor Plan aims to promote the national semiconductor industry and the inclusion of Brazil in the international supply chain. The plan has potential to stimulate and strengthen the existing industry and attract new investors to the domestic market. The development of Brazil’s semiconductor industry may develop new avenues and resources for the U.S. semiconductor industry and create opportunities for U.S. companies in Brazil. Potential areas of focus may include developing the enabling environment, cooperation on the regulatory environment, downstream production, and workforce development.

The growing importance of mobile telephony requires improvements in service delivery, particularly within developing countries, such as Brazil, where challenges and opportunities for expanding the existing infrastructure network are greater. Market expansion will require infrastructure investment and service improvements. Public investment has typically been required to service the most remote areas of Brazil.

The GOB private government 5G network is currently being designed and poses opportunities for U.S. companies to participate.  In the second phase, which is expected to occur in February 2023, the GOB expects to release a second RFP to contract a company for the construction of the physical network, based on the network design. The GOB expects the network to be completed and running within a four-year timeframe, by sometime in 2026. 

According to Brazilian regulations, ICT products sold and used in Brazil must have a Certificate of Conformity issued by a Designated Certification Body (OCD), indicating compliance with Brazilian regulatory requirements. This certificate must also be approved by ANATEL. The chosen OCD will examine the technical characteristics of the product and determine applicable certifications and approvals.  The list of OCDs designated by ANATEL can be found here.  Brazilian law requires manufacturers of imported products to have a local representative responsible for product supply and warranty within Brazil.

Resources

• Brazilian Association of Software Companies – ABES
• Brazilian Association of Information and Communication Technology Companies – Brasscom

Contact Information 

For more information, please contact the US Commercial Service Industry Specialist at Patricia.Marega@trade.gov.