Semiconductor design: A new frontier to next generation business in Bangladesh
The potential for the semiconductor industry to serve as an economic catalyst for Bangladesh’s entry into the 4th Industrial Revolution is worth exploring
Semiconductor technology is at the heart of today's digital age, powering everything from smartphones and laptops to automobiles and advanced medical devices. Semiconductor chips constitute a fundamental building block of electronic devices. These vital technological components, sometimes called Integrated Circuits (IC) or, more generally, just chips, are some of the most miniature but precise items ever created.
The utilisation of these chips has facilitated progress in numerous domains, such as computing, healthcare, military systems, transportation, sustainable energy, and countless other applications. According to the Semiconductors Industry Association, semiconductors are considered the brains of modern electronics, with their developments being the reason behind the shrinking size of electronic devices during the last 50 years.
A single semiconductor chip has as many transistors as all of the stones in the Great Pyramid in Giza. Today, there are more than 100 billion integrated circuits in daily use around the world—that is equal to the number of stars in our corner of the Milky Way galaxy. It is truly a modern marvel, a feat of human ingenuity and engineering unmatched by any other industry.
Semiconductor production
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Semiconductor firms generally organise their activities around the two main stages of production: design and manufacturing. Companies that focus only on design are referred to as "fabless" firms, while companies that focus only on manufacturing are called "foundries."
Semiconductor firms that do both are called Integrated Device Manufacturers, or IDMs. Fabless semiconductor companies typically rely on outsourcing their chip manufacturing operations to foundries predominantly located in Asia.
The global industry leaders in semiconductor chip manufacturing are Intel, Samsung, TSMC, Qualcomm, Nvidia, and Texas Instruments. The market size of semiconductor manufacturing will reach $1,033.5 billion by 2031.
The industry in Bangladesh is still in its nascent stage with industry insiders estimating that Bangladesh is currently earning about $5 million annually, a glaring contrast compared to India which is earning around $60 billion annually.
Although chips are the main output, many market players in Bangladesh still limit themselves entirely to specific stages of the chip-making process. The reasons behind such trends are obvious: a shortage of capital and capacity, both on the financial and technological fronts.
According to a recent New York Times report, there is a huge chip engineer shortage globally. The report says that the US semiconductor industry could face a shortage of about 70,000 to 90,000 workers over the next few years. It presented a shortfall of about 300,000 engineers and 90,000 skilled technicians in the US alone by 2030.
Bangladesh produces about 22,000 electrical and computer engineering graduates every year. If only 1,000 of them are trained in chip designing, there will be 10,000 chip designers by the next decade, and that will translate to a half-a-billion-dollar industry.
As we shall be enjoying the demographic advantage of a young nation for the next 20 years, we must start this process immediately to reap the dividend.
Semiconductor designing cannot be learned online. There are no YouTube tutorials, no one shares this knowledge. Even Taiwan has established strong intellectual property protection laws and regulations, which have contributed to safeguarding their intellectual hold.
In Bangladesh, the enforcement of copyright laws is very lax. This needs to be addressed if we want to develop the ecosystem for the semiconductor industry.
Our academic curriculum lacks focus on semiconductor designing. The courses need to be updated and expert faculty members need to be brought in to teach and research semiconductors. We need faculties who have worked with semiconductors and have real-life work-experience.
People who worked with leading chip manufacturers or have done advanced study in the field should be approached and invited to spend a few years in the local universities. Training sessions for the existing engineers need to be arranged to upskill them in chip designing.
Additionally, chip testing labs should be set up. An investment of $10-20 million is needed to have a very well-functioning chip testing lab. The government must look into this and allocate this fund for the long run.
Penang is known as the Silicon Valley of Asia. It shot to the limelight in 1972 when Intel built its first international manufacturing plant there. Intel was followed by many other big US names such as Broadcom, Dell and Motorola. Penang commanded an estimated 5% of global semiconductor exports in 2019, according to data compiled from the Department of Statistics Malaysia (DOSM) and UN Comtrade.
Hewlett Packard (now Keysight Technologies and Agilent Technologies), Robert Bosch, AMD, Litronix (now Osram Opto Semiconductors), Hitachi (now Renesas), Clarion and National Semiconductor – sparked the development of a robust ecosystem of ancillary industries, which formed a foundation for the state's rise as a prominent, offsite manufacturing hub of semiconductors.
Despite the disruptions from the Covid-19 pandemic, Penang's total exports continued to rise in 2020, growing 7% year-on-year to RM310 billion (US$75 billion), and a further 14% year-on-year in January and February 2021, driven by strong global demand for semiconductors.
Following the COVID-19 pandemic, the semiconductor industries of Penang started experiencing a shortage of engineers to design and test the chips. Many of the VLSI (Very Large-Scale Integration) designers were poached by China, Taiwan and South Korea.
Bangladesh can take advantage of this shortage and propose the companies to outsource their design and testing jobs to Bangladesh. This will not only complement Penang's semiconductor manufacturers, but also will enable technology and knowledge transfer to Bangladesh.
Bangladesh's semiconductor industry
Bangladesh has set a goal to increase the valuation of its IT sector from the current $1 billion to $5 billion by 2025. The potential for the semiconductor industry to serve as an economic catalyst for Bangladesh's entry into the 4th Industrial Revolution is worth exploring. The Hi-Tech Park Authority is investigating the possibility of sending local engineers abroad for advanced study and hands-on training in semiconductor-related sectors.
The Bangladesh HiTech Park Authority has been working to develop the semiconductor sector by offering tax breaks and other financial advantages to businesses that manufacture semiconductors. The government has also granted tax holidays to firms that produce semiconductors and exemptions from import taxes on the machinery and raw materials used in the manufacturing process.
High-skilled workers with backgrounds in electrical engineering, physics, material science, and computer science engineering are needed in the semiconductor businesses. Engineers may be offered necessary benefits in exchange for staying in their native countries and working for themselves in this sector.
Bangladesh provides considerable market potential for the semiconductor sector due to the country's high demand for electronic devices, including smartphones, tablets, desktops, and laptops.
As a result, the semiconductor design industry is gradually gaining ground in Bangladesh. The business model typically involves companies offering semiconductor design services to cater to various industries, including telecommunications, electronics, and IoT.
A few expatriate Bangladeshis have taken a bold step into the semiconductor industry that has led to steady growth.
Six startups currently offer chip design services in Bangladesh. Three focus on mainstream chip design: Neural Semiconductor Limited, Ulkasemi Limited, and PrimeSilicon Limited. Others, like sBit Inc., Linear Micro, and Next Silicon Ltd., provide Electronic Design Automation (EDA) tools and support.
Business ecosystem
The following are required to make the semiconductor design industry successful in Bangladesh:
- Potential clients: Reliable clients with skilled management, advanced projects, and a growth mindset are vital. Overseas startups can play a significant role in initiating such companies.
- EDA tool support: Expertise in Electronic Design Automation tools is crucial. Bangladesh now has representatives from leading EDA vendors: Cadence, Mentor Graphics, and Synopsys.
- Human resources: Universities need to offer VLSI (Very Large-Scale Integration) courses to create semiconductor design engineers.
- Consultants: Trust and confidentiality are essential in acquiring projects. Non-Resident Bangladeshi consultants working in relevant fields abroad (preferably in Silicon Valley) may facilitate client acquisition and technical guidance.
The battle for chip supremacy
Manufacturing semiconductors is an extremely challenging, high-stakes industry that has historically seen enormous corporate competition. The contest now includes governments as well. There is a global reliance on a small number of firms since they are so expensive and difficult to produce.
Chip availability has also evolved into a geopolitical weapon as the United States tightens restrictions on shipments to China to quell the growth of a business rival. The CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act of 2022, recently implemented in the United States, reflects a growing concern regarding the domestic production of semiconductors. The Act aims to promote semiconductor fabrication within the country's borders.
Currently, TSMC and Samsung are the only fabs capable of manufacturing the most advanced 5-nanometer chips. Both are preparing for 3-nanometer chips that may go into production at any time.
As the demand for semiconductors continues to rise worldwide, it is imperative for countries to strategically explore new industries and seize market opportunities to secure a share of the market. The attainment of success in this particular industry significantly depends on political foresight and direction.
Bangladesh must increase the number of experts in VLSI and ensure their ongoing training. The current state of semiconductor expertise in Bangladesh is limited due to insufficient knowledge and practical experience.
It is suggested that Bangladesh prioritise the design, servicing, packaging, and testing processes, particularly in the initial stages. The prioritisation of industry-academia collaborations is recommended to streamline academic curricula and expedite the development of VLSI specialists.
Establishing postgraduate training programmes as a fundamental component for individuals within this industry is imperative. It is recommended that Bangladeshi experts hailing from the Silicon Valley of the United States be engaged in the advancement and expansion of the industry.
According to recent research, the potential for Bangladesh to become a leading economy in the future could be significantly enhanced through investments in semiconductors.
Syed Almas Kabir is the former President of the Bangladesh Association of Software & Information Services (BASIS).
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.
