India’s chip ambitions offer Bangladesh a semiconductor industry blueprint

What is the new strategic resource of the 21st century? The answer lies in a small word: semiconductor. 

It can be said that semiconductors have become the invisible nervous system of modern civilisation. Smartphones, automobiles, hospital equipment, data centres, artificial intelligence and even modern defence systems depend on chips smaller than a fingernail. 

The post-Covid-19 supply crunch and the new realities of technological geopolitics have brought this industry to the centre of both economics and diplomacy.

The expansion of the chip industry is itself a testament to its strategic importance. Global semiconductor sales reached $791.7 billion in 2025, up 25.6% from the previous year. The market is projected to expand even faster in 2026. Demand for artificial intelligence-driven infrastructure is playing a major role in this growth, particularly in the memory-chip segment.

The complexity of the semiconductor industry is also what makes it distinctive. One layer is chip design, where intellectual talent and software capabilities are paramount. The second is wafer fabrication, which requires highly advanced technology, enormous capital, uninterrupted power and purified water. The third is assembly, packaging and testing.

Building a modern fabrication plant can require an initial investment of between $10 billion and $20 billion. The path into the chip industry, therefore, is not the same for every country; the realistic strategy is to choose the appropriate stage of the value chain in line with a country’s capabilities and resources.

It is against this backdrop that India has launched a far-reaching national initiative in the semiconductor industry over the past few years. India’s major strength has been in chip design. According to the government, India accounts for nearly 20% of the world’s chip-design talent. International companies have long maintained research and development operations in technology hubs such as Bengaluru, Hyderabad and Pune.

But there was a gap between this strength in design and domestic manufacturing capability. To bridge that gap, the India Semiconductor Mission, with an outlay of ₹76,000 crore, was approved in December 2021.

India’s goal is now not merely to establish one or two chip factories, but to gradually build a comprehensive semiconductor ecosystem. The Semicon 2.0 programme, approved in 2026, brings design, equipment and materials, fabrication, packaging, research and skills development under a single framework. The Tata-PSMC fab project in Gujarat, Micron’s packaging initiative and other projects in Assam and Gujarat are all part of this broader effort.

India’s advance in the semiconductor industry is being driven by long-term planning. Establishing a fab is slow, expensive and technologically complex. A shortage of skilled manpower is another major challenge. Tata has sent more than 200 employees to Taiwan for training – an indication of how crucial human-resource development is alongside the creation of physical infrastructure.

India’s experience offers an important lesson for Bangladesh: entering the semiconductor industry is not about a single project. It requires long-term policy, skills, research, international partnerships and patient investment across every stage of the industry.

For Bangladesh, the importance of this industry lies primarily in the need to diversify the economy. More than 80% of the country’s total export earnings still come from the ready-made garment sector. With the deadline for Bangladesh’s graduation from the least developed country category extended to November 2029, the country has gained some additional time to prepare.

This period should not be viewed merely as a respite; it should also be seen as an opportunity to lay the foundations for new, high-value-added industries.

Bangladesh’s semiconductor journey, however, is not starting from zero. Several hundred chip designers are already working in the country, and companies such as Ulkasemi have established links with the international market. 

Proposed tax concessions on raw materials for chip design, testing and packaging in the recent budget, along with policy discussions on semiconductors at the national level, suggest that the issue has come onto the government’s radar.

The most realistic path for Bangladesh may be a ‘design-first’ strategy. Chip design does not require a multi-billion-dollar fab; it requires skilled engineers, modern software, a research environment and connections with global companies. 

At a later stage, opportunities may emerge for investment in assembly, testing and packaging. Malaysia’s long experience shows that it is possible to move step by step from packaging towards design and more advanced technologies.

This is where a natural area of cooperation between India and Bangladesh could emerge. India has a large technology market, extensive design expertise, research institutions, and rapidly developing semiconductor manufacturing and packaging infrastructure. Bangladesh has a young engineering workforce, comparatively cost-effective talent and both the need and the potential to enter new technology sectors.

There is no reason to view the two countries as competitors in the same industry. Instead, both could benefit through skills development, research collaboration, industrial training, joint investment and the development of regional supply chains.

Bangladesh, however, faces no shortage of challenges. Although the number of engineering graduates is growing, there remains a shortage of specialised skills suited to the industry’s needs. Opportunities for advanced training in VLSI, semiconductor physics and electronic design automation software, as well as practical research, will have to be expanded.

The semiconductor industry also requires extremely pure water, commonly known as ultra-pure water (UPW), primarily for cleaning wafers during chip manufacturing. This is because even microscopic dust particles or chemical contamination can damage semiconductor chips. Vast quantities of ultra-pure water are therefore needed to keep wafers clean and free from contamination.

Reliable electricity, advanced logistics, industrial zones capable of supporting cleanrooms and international standards of intellectual-property protection must also be ensured.

The biggest mistake would be to regard the construction of an expensive fab at the outset as the sole symbol of success. Bangladesh needs to carve out a place in the value chain according to its own capabilities — beginning with design and skills, then moving into packaging and testing, and progressing over time towards more advanced capabilities.

Semiconductors will not become an overnight alternative to Bangladesh’s ready-made garment industry. Even the potential export targets for 2030 remain aspirations, not achieved realities. But in the economy of the future, it will not be enough merely to remain a user of technology. Bangladesh will have to secure its place in the global chain of technology creation.

India’s progress in the semiconductor industry carries an important lesson for the region: high-technology industries are built on long-term preparation, policy continuity and international cooperation.

Bangladesh, therefore, has an opportunity to learn from India’s experience, create new avenues for mutual cooperation and build a path suited to its own strengths. In this new age of silicon, the road to success for South Asia’s two neighbours could become wider through cooperation.