Considered the most promising industry of the 21st century, the global semiconductor market is set to reach a trillion-dollar mark by 2030. Where does Bangladesh stand?
From missiles to microwaves and smartphones to the stock market, the chips enable everything. Bangladesh stands to benefit a lot by strengthening its semiconductor industry. Photo: Rajib Dhar
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From missiles to microwaves and smartphones to the stock market, the chips enable everything. Bangladesh stands to benefit a lot by strengthening its semiconductor industry. Photo: Rajib Dhar
Microchips are the new oil, the scarce and essential resource that fuels the modern world, argues Chris Miller in his book Chip War: The Fight for the World’s Most Critical Technology. From missiles to microwaves and smartphones to the stock market, the chips enable everything.
For any electric essentials you might have at home (including computers, washing machines, electric tea kettles, automobiles, etc), semiconductors or microchips play a significant role in their operations.
In the future of technological marvels and wonders, semiconductors will prove to be indispensable to most devices for human use.
Considered the most promising industry of the 21st century, the global semiconductor market, according to McKinsey, is set to reach a trillion-dollar mark by 2030 which reached $600 billion in 2021 with a remarkable 20% growth rate.
Bangladesh is also a participant in this flourishing industry, although a very small account at present – with several companies like Ulkasemi, Neural Semiconductor, Prime Silicon and Toton Electronics currently at play. And big companies like Walton and ACI are also reportedly set to enter the market.
According to industry insiders, Bangladesh earns around $5 million annually by mostly designing integrated circuits (ICs). However, the country’s future print in the chip industry could be ambitious as Salman F Rahman, prime minister’s private industry and investment adviser said in an event last year that Bangladesh has the potential to export $3 billion worth of semiconductors in the next five years.
Among the semiconductor companies in Bangladesh, Ulkasemi is the oldest.
Established in 2007, the company provides state-of-the-art chip design services and expanding its services towards prefabrication services, such as test programme development, chip testing and packaging.
It works in various capacities including custom IC design using the latest nodes for next-generation electrical flagship product lines such as mobile devices, networking, communication chips, complex routers/switches, cloud servers and storage, medical equipment and imaging, etc.
Photo: Rajib Dhar
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Photo: Rajib Dhar
Its founder Mohammed Enayetur Rahman has recently shared his insights of the semiconductor industry’s potentials in Bangladesh which derived from his year-long experiences in the Silicon Valley and subsequent efforts to lead Bangladesh’s journey to the chip world.
“Having experience working in Silicon Valley, I believe semiconductor has a bright future in Bangladesh. The scope and expertise of Ulkasemi as well as like-minded companies and their works prove that Bangladesh is ready to work in this field,” Enayetur Rahman said.
In the fast-proliferating semiconductor market, industry insiders are positive that Bangladesh can play a key role. But that to happen, Bangladesh needs to concentrate on having knowledge and skills in designing high-value chips as it could help make the market more competitive and create new technology while awarding the country a leadership position in the market.
Currently, among the key challenges that the budding industry faces are infrastructure, skilled labour and investment. Bangladesh still lacks advanced semiconductor fabrication facilities. The number of skilled chip design engineers is still insufficient. Besides, investing in the semiconductor sector requires a lot of money.
“Bangladesh has the potential of capturing 2%- 4% of the global one trillion market by 2030. But to achieve that you need to take some steps,” Enayetur said.
Among the steps he mentioned are government investment, skilled manpower development, improved education system, research and development, favourable policy support and global partnership.
While the Bangladesh government has engaged in the investment process which manifested in steps like tech parks building, the insiders advised that investment from both the government and private sector should be increased.
Besides, there is a shortage of skilled workforces in the country. There are engineers and scientists here in Bangladesh. However, several skilled hands in the chip design and prefabrication sector are inadequate. Some universities and technology institutions are offering chip design and prefabrication courses. But the number and standard of these courses are not enough.
Bangladesh’s export diversification question has long been in discussion.
Among the three broad tracks of diversification, first comes the diversification scope within the garments industry. Secondly, the non-garments but labour-intensive industry as we still have a surplus of labour in our country. What the garments did by utilising the cheap labour could be replicated in other traditional industries like the leather or new industry where our main comparative advantage would be cheap labour as in garments.
“But ideally, we should move to more sophisticated products where we will use the labour but we will gradually advance to the utilisation of skilled labour. We should advance to an industry like that as a developing country,” economist Syed Akhtar Mahmood said.
He said in regards to the comparative labour advantage that the RMG sector is privileged with, it could be replicated in the skilled labour in Bangladesh too.
“Because the cost of employing an engineer in our country is less than in other countries like India and Vietnam. So, we have a comparative cost benefit in the engineering sector,” he said. “We have to take a decision as a nation that how long we will be depending on cheap labour for export. Because we have to move to skilled belt either way. I am talking from the labour point of view.”
Photo: Rajib Dhar
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Photo: Rajib Dhar
He further added, “If we go to sophisticated products like electronics, there are many skills to learn here. What we can learn in garments, we can learn more in electronics which we can use in other industries. So, this is about the overall strategy… that we will shift from cheap labour to skill-based labour strategy. That we will go from simple to more complex and sophisticated products. This is an overall perspective. And in that consideration, semiconductor is an attractive proposition,” the economist added.
Now among the total value chain in chip design are several stages including design, prefabrication, after fabrication from assembling-testing etc. There are many areas to explore. Packaging for example, once fabricated, the chips need to be protected and housed before they can be used. The chips are put onto circuit boards and rigorously tested to ensure they function properly in the assembly and testing phase.
A key question, however, is where should Bangladesh focus at this stage based on the comparative advantages.
Focusing on design is a smart move for Bangladesh at this moment due to several factors, said an industry insider. Compared to fabrication (building the chips themselves), design requires less upfront investment in expensive equipment and infrastructure. The need for skilled IC designers is high around the world. Bangladesh can tap into this by building a strong design industry.
However, emphasizing the skilled workforce, he said, “Bangladesh’s journey in the semiconductor industry is not just about building chips – it is about building a skilled workforce and a robust economy that benefits all citizens.”
Syed Akhtar Mahmood also said that, based on his interaction with industry insiders, Bangladesh should focus on the comparative advantage of the design sector at the moment. “Chip designs are growing demanding but they are showing their capacity in making demanding designs as well,” he said.
He further explained that if we grow too excited and get to the fabrication stage as India went, we have to think through if we really can go for fabrication at the moment.
“The mistake that many countries made was they got excited and thought they could do it, then after a lot of time and money was spent, it didn’t work. A good example could be Indonesia’s project to make aeroplanes which ultimately failed.
We have to think carefully. We should go ahead in the stages where we have a competitive advantage. The policymakers in Bangladesh should talk with business insiders and go ahead without getting too excited,” the economist explained.
