Can Bangladesh realistically become a semiconductor powerhouse?

The semiconductor industry—the foundation of modern technology—is a trillion-dollar sector at the heart of global geopolitics and economic competition.

From artificial intelligence (AI) to electric vehicles (EVs), semiconductors power everything. As the world reshapes its supply chains amidst US-China tensions, nations like Bangladesh have an opportunity to carve out a niche. But how realistic is it for Bangladesh to become a player in this high-stakes game?

The global semiconductor landscape

Countries like Taiwan, South Korea, the US, and China dominate the semiconductor landscape. Taiwan's TSMC alone produces 60% of the world's semiconductors, including 90% of advanced chips. The US, a leader in chip design, heavily relies on Asian manufacturers, while China's ambitions for semiconductor self-sufficiency are hindered by US sanctions.

Amidst these dynamics, smaller nations are emerging as alternative hubs to diversify supply chains. Can Bangladesh seize this opportunity?

The challenges Bangladesh faces

Entering the semiconductor market is far from simple. Bangladesh's current $6 million annual revenue from semiconductor-related activities is limited to packaging, assembly, and testing—a small fraction of the global market. Major hurdles include:

High Capital Requirements: Building semiconductor fabrication plants (fabs) costs over $10 billion. Bangladesh's limited resources make this challenging.

Skill Shortages: While Bangladesh produces STEM graduates, few are trained in semiconductor design or manufacturing.

Infrastructure gaps: Reliable energy, water, and logistics—all essential for semiconductor production—are insufficient.

Geopolitical risks: Navigating the US-China semiconductor feud requires careful diplomacy.

Opportunities Bangladesh can leverage

While manufacturing advanced chips may be unrealistic for now, Bangladesh can explore other parts of the semiconductor value chain:

Packaging and Testing: These processes are less capital-intensive and can serve as an entry point into global supply chains. By building modern facilities, Bangladesh can attract contracts from major chipmakers.

Custom Integrated Circuits (ICs): Developing ICs for specific industries like agriculture or healthcare can help Bangladesh carve out a niche.

Automotive Semiconductors: With the rise of EVs, there is growing demand for power semiconductors and advanced chips.

Talent Export: Countries like the US face a significant shortage of semiconductor experts. Training engineers in this field could open up lucrative opportunities abroad.

Geopolitical shifts: US-China feud and Taiwan's role

The semiconductor industry is a key battleground in the US-China rivalry. Taiwan, home to TSMC, is at the centre of this tension. While the US imposes sanctions on China to stifle its semiconductor ambitions, China continues to invest heavily in domestic production.

Bangladesh, strategically located in Asia, must tread carefully. By maintaining neutral relationships, it can attract investments from both Western and Chinese companies. Strengthening ties with Taiwan without irritating China could also facilitate technology transfer and training opportunities, though this comes with significant geopolitical sensitivities.

Learning from India's playbook

India has recently positioned itself as an emerging semiconductor player, with initiatives like a $10 billion incentive scheme for chip manufacturing. Companies such as Foxconn and Vedanta have announced plans to build facilities in India. Bangladesh can adopt similar strategies:

• Offer tax incentives and subsidies to attract foreign investors.
• Build academia-industry partnerships to create a pipeline of skilled workers.
• Promote public-private collaborations to share infrastructure development costs.

Steps Bangladesh must take

Policy Framework: Establish a national semiconductor task force comprising government, industry, and academia to chart a long-term strategy.

Education and Training: Introduce specialised courses in semiconductor design and manufacturing at universities. Exchange programmes with Taiwan and South Korea can bridge the skills gap.

Infrastructure Investment: Develop industrial zones with reliable utilities and logistics dedicated to semiconductor activities.

Strategic Partnerships: Collaborate with global companies for technology transfer and joint ventures.

Start with Packaging and Testing: Focus on low-capital segments like packaging and assembly to gradually integrate into the global supply chain.

What industry experts say

Many domain experts I consulted emphasised that the semiconductor industry is driven by innovation and geopolitics. Smaller nations like Bangladesh must focus on their strengths and target specific segments of the value chain. By building strategic partnerships, Bangladesh could achieve meaningful participation in the global semiconductor race.

Can Bangladesh achieve this dream?

The road to becoming a semiconductor powerhouse is challenging but not impossible. By focusing on niche areas, investing in human capital, and capitalising on global supply chain shifts, Bangladesh can establish itself as a valuable player.

While immediate ambitions must remain realistic, the long-term benefits—economic diversification, job creation, and technological advancement—make this an endeavour worth pursuing. As the world looks to diversify its semiconductor supply chains, Bangladesh has a rare opportunity to position itself on the global map—not just as a consumer but as a contributor to this critical industry.
While at PwC, our team conducted a study to chart this sector's potential for a large local corporation. I am now pleased to see that BIDA has established a task force to scope out the opportunity and decide on the necessary steps. Let's dive deep and not merely skim the surface.

Mamun Rashid is the founding managing partner of PwC Bangladesh and chairman at Financial Excellence Ltd.