Advancing Bangladesh’s semiconductor manufacturing capabilities

Given today's rapid pace of technological advancements, the semiconductor industry can only look forward to further growth in the coming years. 

In the last decade, this growth has been driven by the demand for sensors due to the Fourth Industrial Revolution. Now, it is being driven by the increasing use of artificial intelligence (AI), which requires more advanced computing infrastructure. 

The current global market for the semiconductor industry is worth about $575 billion, according to  analysis by PwC.

In that context, the question now is the prospect of the semiconductor industry in Bangladesh. 

There are three factors influencing such thinking. 

First, the cost of technology is perpetually decreasing and so is the cost of setting up factories. The need for very high investment to set up the foundries of fabrication shops used to be a barrier to entry in the semiconductor industry. However, this barrier has become comparatively insignificant in recent times. 

The second factor is the increasing size of markets due to the increased adoption of electronic goods such as smartphones, tablets, computers and the internet-of-things (IoT) devices. The high population and young demographic should also be considered while assessing the size of the market. 

As per the population census 2022 conducted by the Bangladesh Bureau of Statistics, the population of Bangladesh was about 165 million in 2022. According to the data published by the Bangladesh Investment Development Authority (BIDA), the consumer electronics market of Bangladesh will reach $10 billion by 2030 and is expected to grow at a rate of 15% per annum. This makes the electronics market a sizable one, although it cannot be compared to those of developed nations.

Thirdly, the macroeconomic growth of the country has been quite high in the past several years, and the manufacturing sector has played an important role in that journey. The readymade garments (RMG) industry has grown manifold and is the leader in earning forex revenue for the country. All these manufacturing establishments will now have to transform themselves into digital factories to remain relevant in the future, thus driving the higher demand for semiconductor chips and associated components.

Bangladesh has already established itself as a capable manufacturer of electronic goods that can meet its domestic market demand. And the growing size of the market has attracted several foreign electronics companies to set up assembly facilities in Bangladesh. The market has also helped entrepreneurs set up several domestic companies that have been leading their respective industries.

These companies are also thinking of vertically integrating their sector value chain by entering into the semiconductor sector, such as chip packaging. Those who are already leaders in electronic component assembly and retailing those as finished white goods would benefit from a vertically integrated domestic supply. This would also help push the import reliance further up the value chain, thereby helping reduce the import bills.

There could also be a marked focus on participating in the chip design process. Bangladesh already has a few companies that focus on semiconductor chip design and work by collaborating with international companies. Those companies should be brought under the common ecosystem of the integrated electronics and semiconductor sector to widen participation and deepen capabilities.

However, this journey into the semiconductor sector will not be an easy one. Apart from foreign competition, issues in terms of capability development, talent development and investments are expected. But with the right kind of promotion and policy support, the semiconductor sector of Bangladesh can grow considerably in future.

Arijit Chakraborti is a partner with PwC. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.