Intel Capital, Intel Corp.s’ venture investment group, announced it had agreed to invest in secured convertible notes issued by Digitron, a large manufacturer of computer mainboards in Brazil. The investment will help to further accelerate Digitron’s expansion plans and stimulate Brazil’s PC industry growth and innovation capabilities, the company indicated.

“Intel Capital sees significant growth opportunities in Brazil. Providing financial support to companies such as Digitron will help accelerate the development of innovative computing platforms in Brazil and throughout the region. Through the business agreement, Intel also plans to share our best practices to expand and enrich PC manufacturing capabilities in Brazil,” said Arvind Sodhani, president of Intel Capital.

According to IDC, the number of PCs sold in Brazil in the first half of 2005 was 44% higher than the same period in 2004. To further promote PC adoption in the country, the federal government launched a new entry-level PC program named “PCs for everyone”, and has also created tax incentives and favorable financing for the purchase of locally manufactured PCs.

Founded 19 years ago, Digitron today employs about 300 specialists and assembles mainboards and other computer parts. Currently the company produces two million mainboards per year, but expects its sales to increase towards three million mainboards in twelve months. According to David Thomas, managing director for Intel Capital in Latin America, Digitron has 40% of the legal mainboard market in Brazil and is the largest non-multinational player in the country. A statement by the companies indicate that Digitron had invested in its assembly lines to launch platforms that require new manufacturing processes, including lead-free compliant mainboards and mainboards that support dual-core microprocessors.

Intel’s investment into a large Brazilian manufacturer may add pressure on its arch-rival Advanced Micro Devices. Principally, Intel would control 40% of computers that are sold legally, including computers for the government or sold via governmental programs. Still, in emerging markets, such as Brazil and Russia, the market of the so-called “grey” components (that are imported without paying taxes or certifying electronic components with appropriate authorities) is extremely large and controlling 40% of the legal market may not become an immediate benefit for the chip giant.