Semiconductors serve as the central processing units of a wide range of electronic devices, ranging from microwaves and mobile phones to drones and automobiles. Their existence has enabled the creation of lightweight, slim, and portable devices that are faster, cheaper, and more efficient than ever before. Semiconductors are essential components that have facilitated the development of technologies critical to economic growth, national security, and global competitiveness. Given their vital role in our daily lives, semiconductors and their industry will only become increasingly important with time. Consequently, countries are competing to gain a competitive edge in the semiconductor industry and establish their dominance in this crucial sector, which has far-reaching implications for international trade and global power dynamics. What is a semiconductor actually? Semiconductors are essentially super-small electronic devices made from silicon, germanium, or gallium arsenide compounds.
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These components are integral to the functioning of digital devices, as they allow us to control the flow of electricity within machines. They have replaced the cumbersome long-wired and tubed machines of the past, and are manufactured using cutting-edge Very Large-Scale Integration (VLSI) technology. These chips or integrated circuits (ICs) are composed of many tiny nanometre (nm) transistors, which are connected and etched onto a silicon wafer surface using ultraviolet rays. The plants that produce these ICs are known as foundries or fabs, and they manufacture chips for other companies using their designs.
Needless to say, the semiconductor industry presents vast opportunities for growth and innovation, making it an attractive field for exploration. As a rapidly expanding industry, entry into the semiconductor market would provide numerous avenues for growth and expansion. Bangladesh, in particular, could benefit from diversifying its export basket away from the overdependence on Readymade Garments (RMG) with LDC graduation and loss of preferential tariffs in its export markets. Given the likelihood of continued growth in the semiconductor market, exploring opportunities in this sector could be an excellent strategy for Bangladesh to explore. So, where does Bangladesh stand in the semiconductor industry?
WHERE IS BANGLADESH IN SEMICONDUCTOR INSDUSTRY?
In the past, Bangladesh had no significant presence in the hardware manufacturing industry, including the semiconductor sector. However, this scenario is rapidly changing with the emergence of players like Ulkasemi, PrimeSilicon, and Neural Semiconductor in the market. Furthermore, Walton, a local electronics giant, has plans to invest in the semiconductor industry and has already secured a location in the Bangabandhu Hi-Tech Park. ACI, a leading industrial group in the country, also plans to invest in this sector. These developments provide hope for further progress in the industry.
While the production of semiconductor chips is the main focus, many players in the industry still to restrict themselves to specific stages of the chip making process due to a shortage of capital and capacity on both the financial and technological fronts. India earns approximately 60 billion USD annually from the market, while Bangladesh’s earnings in this sector are significantly lower at around $5 million.
However, Bangladesh has a promising future in the semiconductor industry. It is because the domestic demand for laptops, computers, and smartphones are growing over the period. And, the multi-level manufacturing process involved in producing semiconductor chips requires a substantial amount of labor. Bangladesh has an advantage in this regard since the average monthly fee for labour is lower than in Myanmar, Cambodia, and China, according to Trading Economics. In Bangladesh, the average monthly fee is only $101, while in the other countries, it ranges from $135 to $518. This low labour cost gives Bangladesh a competitive advantage in the rising semiconductor industry. Additionally, the country’s huge population, which has previously been seen as a hindrance to development, is now an advantage due to the demographic dividend it provides.
CHALLENGES AND OPPORTUNITIES FOR BANGLADESH
Establishing a semiconductor industry poses numerous challenges that need to be understood before entering the market. Firstly, this industry is knowledge-intensive, requiring skilled workers in various fields such as material science engineering, computer science engineering, electrical engineering, software development, and other specialized areas. Additionally, continuous research and development are necessary in the semiconductor manufacturing process. However, attracting and retaining skilled workers in the country is a challenge. They do not like to stay in the country, rather they prefer to go abroad for better opportunities. Attracting the young graduates to the newly built high-tech parks, there is a significant requirement for infrastructure and amenities
. In this backdrop, the government has taken measures to encourage the semiconductor industry’s growth, but private businesses and hi-tech park authorities need to collaborate to provide local engineers with higher education and intensive training to attract them to the industry.
Secondly, the initial cost of setting up a semiconductor manufacturing business installation is very high, requiring a significant investment in multi-billion dollar machinery and raw materials. Access to finance and the ability to secure it are also crucial for businesses looking to enter this industry. Although measures such as tax breaks and the creation of dedicated hi-tech parks have been taken to attract foreign direct investment, the desired investment still is far away.
Thirdly, the country needs to establish the necessary infrastructure and facilities to support a high-tech semiconductor industry. Land acquisition, local transport systems, and management of port or airport consignment time are crucial factors. The industry is dependent on importing sensitive materials and equipment, including chemicals, gas, and wafers, so having active ports and airports and a reliable local transportation system is a necessity. Lastly, to gain the trust of buyers, it is essential to establish a marketplace that offers quality products while minimizing manufacturing costs. Hence, Bangladesh should exercise prudence before making significant investments in this industry. It must ensure that all challenges are addressed before committing to such investments, considering the semiconductor industry’s high value, demand, return, and risk.
Nevertheless, the semiconductor industry has enormous potential in Bangladesh, as the country has already fulfilled several prerequisites to excel in this field. For example, a pool of skilled workers can be readily prepared, as many engineering graduates in Bangladesh study VLSI technology at the university level and possess fundamental knowledge of chip design. Hands-on practical training can enhance their understanding and prepare them for the industry. Furthermore, Bangladesh has already established several hi-tech parks and economic zones, ensuring that land availability will not be an issue. Local road and transportation infrastructure is also improving, and the country is constructing new ports and airports to meet industry requirements in the coming years
“Bangladesh has the potential to export $3 billion worth semiconductors in the next five years. The fourth industrial revolution is going on, so it is time for working on artificial intelligence, Internet of Things and robotics”
Salman F Rahman, private industry and investment adviser to the prime minister
Moreover, Bangladesh is a low-wage country, and the average salary of a graduate in Bangladesh is relatively lower than that of leading countries in this sector. This presents an opportunity to minimize total production costs through lower human resource management expenses.
The demand for electronic devices like smartphones, tablets, desktops, and laptops is significant in Bangladesh, creating a substantial market opportunity for the semiconductor industry. Leveraging the existing supply chains and distribution networks established by the well-established garment industry can provide opportunities for semiconductor companies.
In the era of the Fourth Industrial Revolution, the growth of the semiconductor industry is crucial for meeting domestic demand, saving foreign currency, and generating foreign exchange earnings through chip exports. However, success in this sector will require political vision and guidance to bring the industry up to par with others. We must improve industry-academia collaborations and streamline academic curricula to reduce the time required for developing semiconductor specialists. Additionally, training programs after graduation should be standard for those in the industry. Now that we’ve examined the situation in the country, let’s turn our attention to the situation in the rest of the world.
SEMICONDUCTOR INDUSTRY – WORLD’S DEMAND AND ATTENTION
The semiconductor industry has been rapidly growing in recent times due to the progress of a technology-driven world. In 2018, the worldwide profit from semiconductor sales was $481 billion, and it is currently estimated to be over $600 billion. It is projected that the industry will reach one trillion dollars by 2030, according to Mckinsey & Co. However, Bangladesh’s position in this industry is yet to be determined as the country only accounts for around $5 million in this massive market.
Nowadays, many nations consider the semiconductor business as the number one cross-border business in global markets. The Internet of Things (IOT), Artificial Intelligence (AI), Blockchain, and Big Data are being taught and used at educational institutions, business firms, industry levels, public offices, hospitals, and even in households in many countries.
The increasing number of smartphone users has created new demand for chips, making it a billion-dollar business in South Korea, Singapore, Malaysia, Hong Kong, Taiwan, India, and advanced countries such as the USA, UK, Japan, China, and Germany.
During the early 90s, Taiwan, Singapore, and South Korea paid attention to the semiconductor industry to meet the demand of Asian countries. If Bangladesh also pay its attention and can capture even a small part of this industry, it would create a new opportunity for the country to connect with the global value chain of high-tech industries.
FROM DEVELOPING TO DEVELOPED COUNTRY – THE INDUSTRY CAN ACCELERATE TRANSITION
Bangladesh has been transitioning from an agriculture-based country to a more industry-based economy over the past few years, with the government investing heavily in the ready-made garment (RMG) sector to generate substantial revenue. However, the RMG sector is labour-intensive and relies on human capacity to manage the supply chain, which may not be sustainable in the upcoming industrial revolution that requires a focus on automation. Supporting technology industries can help accelerate the transition from a developing country to a developed nation faster.
By 2026, Bangladesh aims to be recognized as a developing country and needs a robust expansion of the IT sector base, as well as the development of semiconductor industries to achieve this status. The semiconductor industry can be the next economic stimulator that Bangladesh needs to enter the 4th Industrial Revolution and transform into a developed and prosperous country by 2041.
Fortunately, the government has investigated diversifying its export base, moving up the value chain, and creating better-paying jobs. By 2025, Bangladesh intends to expand the IT sector from its current valuation of USD 1 billion to 5 billion. The engineers can help promote the semiconductor industry at a faster pace to make Bangladesh a Smart Bangladesh as envisioned by the present government. A robust investment in the semiconductor industry is the need of the hour to achieve this goal.
In wrap-up, we may say that the success of Bangladesh’s traditional industries such as textiles, agriculture, shrimp, and leather goods is obvious, but the country needs to explore new areas such as the semiconductor industry to stay competitive and to keep pace with the world. With the increasing demand for technology-driven products worldwide, investing in semiconductors could reduce Bangladesh’s reliance on traditional industries and pave the way for a technology-dependent economy, aligned with the vision of Digital Bangladesh. Currently, the local design of semiconductor chips only yields a small annual contribution, but if the industry gains traction, it could have the potential to make a substantial impact on the country’s GDP and create job opportunities. By investing in semiconductors, Bangladesh could potentially rise to become one of the leading economies in the world. As the global demand for semiconductors continues to grow, it is crucial for us to take the right steps in exploring new industries and capturing our share of the market. The government has already taken steps to develop the semiconductor industry and create a supportive framework for a technology-driven economy and we hope that it will continue to pay its attention to this sector
