You are currently viewing Chipping into Semiconductor and cutting-edge technology: Challenges and Opportunities

Chipping into Semiconductor and cutting-edge technology: Challenges and Opportunities

“Semiconductor is the foundation of modern-day electronics.” Every millennium brings along a decade-defining technology and innovation that rightfully shape and upheaval the progress of human society. If artificial intelligence and machine learning are the most important innovations of the time, semiconductors are the powerhouse that not only drives the technological revolution ahead but also ameliorates a gigantic global market of a trillion dollar economy.

 Principal players in the semiconductor sector comprise corporations such as Intel, Samsung, TSMC (Taiwan Semiconductor Manufacturing Company), AMD, Nvidia, Qualcomm, and numerous others. These firms conduct research, development, and production of semiconductor products to fulfil the increasing demands of diverse industries, such as consumer electronics, telecommunications, automotive, healthcare, and others.

 Countries like Taiwan, South Korea, Japan, the USA, and China have dominated this economy. Lately, however, we have seen India entering the industry with great inspiration and vision to create an export market of $10 Billion by 2021.

 So, what opportunities lie for Bangladesh in this potential market while the neighbouring country, along with the Asia Pacific region, is skyrocketing in manufacturing the chipsets? Bangladesh currently earns around $5 million annually from the semiconductor industry, mostly by providing integrated circuit (IC) design services.

 In this cover story, we will analyse Bangladesh’s potential to penetrate the market, provide a rigorous statistical overview of the current penetration, analyse the Government’s policy implementation, and present comparative case studies of countries that have excelled with timely and effective initiatives.  

 Semiconductors are the central processing units of various electronic devices, ranging from microwaves and mobile phones to drones and automobiles. They are the fundamental building blocks of contemporary electronics. The semiconductor industry involves various procedures for creating, producing, and constructing devices. This encompasses creating and producing integrated circuits (ICs) consisting of microprocessors, memory chips, and sensors. Semiconductors are essentially super-small electronic devices made from silicon, germanium, or gallium arsenide compounds. These chips or integrated circuits (ICs) are made up of numerous tiny nanometer (nm) transistors that are linked and etched into a silicon wafer surface with UV light.

 The global semiconductor market size was valued at $611.35 billion in 2023 & is projected to grow from $681.05 billion in 2024 to $2062.59 billion by 2032.

 The growing global consumer electronics consumption further supports the market growth. In addition, the development of artificial intelligence (Al), the Internet of Things (IoT), and machine learning (ML) technologies in the new age of electronic systems is generating lucrative market growth opportunities. These technologies assist and enhance memory chip processing time to process large amounts of data in no time. Moreover, the potentially rising demand for faster and more advanced memory chips in data centre applications is expected to drive market growth over the forecast timeline.

 Who holds the market? Who is TMCS?

Any discussion on the semiconductor industry is incomplete without TMSC. The global significance of Taiwan’s chip manufacturing industry is paramount, with the Taiwan Semiconductor Manufacturing Company (TSMC) at its core. Founded in 1987, TSMC has rapidly evolved from a small startup to the 10th largest corporation worldwide by market value in just 35 years, boasting a market capitalisation of USD 617.5 billion.

TSMC is recognised as the world’s leading independent chip producer. It plays a crucial role in manufacturing semiconductor chips for major international firms such as Apple, Nvidia, Qualcomm, and AMD. TSMC’s production processes are essential for creating semiconductors used in iPhones, M1 products, graphics cards globally, and nearly all Qualcomm mobile CPUs.

It is noteworthy that the processors powering the products from these companies are manufactured by TSMC. Besides consumer electronics, TSMC also significantly contributes to the production of chips for advanced military technologies, including those used in F-35 and F-15 fighter jets, which are iconic representations of America’s technological and military prowess.

 What alternatives does Taiwan have, and why is its semiconductor industry so vital to the US, which is thousands of miles away? Currently, there is no viable substitute for Taiwan’s contribution to the global semiconductor industry. Only Intel and Samsung operate their own semiconductor foundries, but they fall short in product diversity, production capacity, and precision.

 Intel produces chips solely for its own devices and lags considerably behind TSMC’s advanced 4 nm chip technology. Conversely, Samsung focuses on producing smartphone chips, including their less popular Exynos series.

 India and China have faced significant challenges in entering the chip manufacturing industry. In the 1980s, India made some headway but experienced a major setback due to a significant fire, with the cost of resuming full-scale operations deemed prohibitive. China has attempted to establish a presence in the chip market for the past two decades, investing billions without achieving major breakthroughs. Recently, the US enacted legislation to provide USD 52 billion in subsidies to support domestic chip manufacturers in building new plants, each costing up to USD 20 billion. Significant income from Macao, Taiwan, and Hong Kong significantly bolstered China’s economic power. Consequently, China is on the path to becoming a superpower through its robust economy, with Beijing maintaining a firm grip on these regions as it does within mainland China.

 Semiconductor and Great Powers

China’s semiconductor industry has experienced enormous growth since the late 1980s, thanks to major government investment and financial incentives targeted at improving output and quality. Although China has experienced significant progress, it still holds a very tiny position on the global stage and strongly depends on foreign technology and imports, especially from the United States. The United States, which holds a commanding 47% share of the global semiconductor market, has implemented trade limitations on China in order to retain its dominant position. The semiconductor manufacturing process spans numerous countries, with China specialising in the labour-intensive packaging and assembly stages, mostly due to their lower technological prerequisites. China’s yearly semiconductor imports exceed $300 billion, while US semiconductor businesses generate 25% of their revenues from the Chinese market. China’s share in critical semiconductor categories, such as electronic design software and logic chips, is less than 1%. In order to enhance local production, the Chinese Government has enacted measures such as providing financial incentives, facilitating the transfer of technology, promoting domestic manufacturing, facilitating mergers and acquisitions, and safeguarding intellectual property rights. These endeavours have resulted in a higher portion of the market in the fields of back-end manufacturing and fabless design. Nevertheless, the escalating tensions between the United States and China, along with trade restrictions, pose a significant threat to the expansion of China’s semiconductor industry. Moreover, China’s period of inexpensive workforce is coming to an end, requiring a transition towards producing sophisticated products such as semiconductors in order to maintain economic expansion. Notwithstanding these obstacles, the Chinese semiconductor sector possesses substantial potential for future expansion, which will be pivotal for China’s economic position in the forthcoming decades. 

 What can we learn from them?

The semiconductor sector plays a vital role in driving global economic growth and fostering innovation. Although China’s semiconductor manufacturing industry has experienced substantial growth since the 1980s, it still falls behind other nations. The Chinese Government has made significant investments in the business by providing tax advantages, subsidies, and financial support. This has allowed them to form alliances with multinational corporations and acquire innovative technologies. Notwithstanding these endeavours, the United States is at the forefront in research and development-intensive sectors and possesses a substantial share of the worldwide semiconductor market. China’s semiconductor manufacturing process significantly depends on foreign technology and imports, with substantial elements of the process, such as wafer fabrication, being carried out in more technologically sophisticated countries. To strengthen the industry, the Chinese Government has enacted laws that provide financial incentives, promote technology transfer, encourage domestic manufacture, support mergers and acquisitions, and safeguard intellectual property. As a result of these measures, China has experienced growth in its market share in the areas of back-end manufacturing and fabless design. This has allowed China to compete at nearly every stage of the semiconductor supply chain. Nevertheless, the trade disputes between the United States and China, along with the increasing labour costs in China, provide notable obstacles. To satisfy the increasing worldwide need for semiconductors, it is crucial to maintain ongoing investment in research, development, and manufacture. China’s shift from inexpensive manufacturing to cutting-edge technology production is crucial for its sustained economic growth and positioning as a major player in the global economy. The success of its semiconductor industry will play a critical role in achieving these objectives.

 Opportunities for Bangladesh with its self-sufficient consumer market and workforce

Bangladesh, with its dense population of over 170 million in a relatively small area, possesses the potential to cultivate a robust consumer market.

Bangladesh’s involvement in global semiconductor industry is limited to only the IC chip design. However, the semiconductor ecosystem also includes silicon wafer production, IC chip fabrication, IC chip packaging, assembly and testing, and integration into products.

Bangladesh currently earns approximately $5 million annually from the semiconductor industry, primarily from the supply of integrated circuit (IC) design services. Bangladesh has set a goal of increasing the IT sector’s valuation from USD 1 billion to USD 5 billion by 2025. The semiconductor industry has the potential to serve as an economic catalyst for Bangladesh’s entry into the Fourth Industrial Revolution.

Some companies, such as Ulkasemi and Neural Semiconductor, have already carved a path in the industry. Even though chips are the major product, numerous players only participate in particular stages of the chip manufacturing process.

However, albeit the absence of a concrete policy framework and structure, Bangladesh has a few major advantages that should propel the public and private sectors to invest more in the semiconductor industry.

 Cost of Technology: The cost of technology has been the main barrier for Bangladesh in investing its resources in this industry. However, since the COVID-19 shock, global manufacturing costs have been decreasing exponentially, which has also resulted in lower costs of setting up factories. This outcome leads Bangladesh to take up the golden opportunity.

 Domestic market Size: According to data published by the Bangladesh Investment Development Authority (BIDA), Bangladesh’s consumer electronics market will reach $10 billion by 2030 and is expected to grow at 15% per annum. With the advent of increased adoption of electronic goods such as smartphones, tablets, computers and internet-of-things (IoT) devices, the high population alongside the unique Demographic dividend, possess a sizeable electronics market in Bangladesh.

 Microeconomic growth: The RMG sector of Bangladesh has played a pivotal role in shaping the country’s microeconomic growth. Now, the factories, alongside championing climate concerns, need to transform into a digital ecosystem in order to remain relevant in the future. Therefore, this competitive development will require for Bangladesh to invest more on technological growth, namely, the semiconductor industry.

 While looking at China’s approach to US export limits on its semiconductor industry, Bangladesh can prioritise the growth of its own semiconductor and technology sectors. This strategy will help decrease reliance on foreign imports and strengthen economic resilience. China’s strategy emphasises the significance of giving priority to the production of tools and materials within the country, promoting collaborations between the public and private sectors, and making substantial investments in research and development. By replicating these tactics, Bangladesh may establish its semiconductor capabilities, guaranteeing long-term viability and expansion in this crucial industry.

However, in the current primitive stage, the key challenges for Bangladesh are infrastructural development, skilled labour and investment. For a developing nation like us, which is opting for the LDC graduation in 2026, such challenges require long term policy initiative with both the private and public sector contributing seemingly. In order to support high-tech manufacturing, the Government must improve its technical education and vocational training initiatives to cultivate a proficient workforce. It is essential to tackle infrastructural shortcomings, such as unstable power supply and insufficient transportation networks. Moreover, effectively managing bureaucratic procedures and establishing a favourable regulatory framework are crucial in order to attract investments from both domestic and international sources. The Government has already established several IT villages, incubators, and ICT parks across the country. These parks offer reasonable terms and tax breaks to investors. By leveraging these investments, we can clearly go on the right path. Another difficulty is maintaining a balance between these investments and environmental sustainability, which requires the implementation of green technologies and practices. To put it concisely, Bangladesh may capitalise on the chance to cultivate a strong domestic technology economy by studying and adopting such strategic positions in the intense global politics that affect the semiconductor sector. To achieve this, it is necessary to make a focused and coordinated effort in developing infrastructure, improving skills, and implementing regulatory reforms. This will help Bangladesh become a strong competitor in the global semiconductor industry and promote economic growth.


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