The Ministry of Information Technology and Telecommunication has drafted a ‘Semiconductor Policy and Action Plan’ to transform Pakistan into a major hub of semiconductor design, manufacturing, and Assembly, Test, and packaging (ATP).
Given the dependence of the national economy and security on semiconductors, it has become imperative to formulate the Pakistan Semiconductor Policy, the draft policy noted.
The five main elements of the strategy, including policy support and incentives, infrastructure development, human resource development, industry ecosystem building and collaboration, and research and development (R&D) and innovation, will be utilized to establish a semiconductor ecosystem in Pakistan.
The policy proposed offering grants, and subsidies to firms/ organizations investing in semiconductor design, R&D, and manufacturing. This will include extending STZ incentives to the semiconductor industry, exemption of import duties on equipment, and machinery for the semiconductor industry, provisioning of soft loans at 25 percent rebated interest rates for setting up industry, providing 25 percent tax rebates for employees working in the industry and R&D organizations.
Also, it proposes to establish a national semiconductor fund of Rs. 10 billion to provide soft loans, grants, startup support, incentives to retain local talent, attract major international firms & foreign diaspora, etc for the next decade.
The semiconductor market can be divided into three segments – 1) chip design, 2) fabrication, and 3) assembly, test & packaging (ATP). The EDA tools & chip design market is mostly dominated by the USA whereas Taiwan is leading the chip fabrication segment. In ATP (also known as OSAT), major market share is held by China. Different segments of the semiconductor industry have varying requirements for investment, HR, and ROI. It is evident that the fabrication and ATP do not guarantee an immediate profit or self-sustenance.
The worldwide semiconductor market has surpassed $600 Billion in 2023 and is poised to cross $1 Trillion by 2030, of which 70% is driven by rapid growth in computing & data storage, automotive electronics, wireless connectivity, and power management. At the same time, the last five years have witnessed major disruption in the semiconductor value chain due to the COVID pandemic and evolving geopolitical rivalries.
Governments have introduced new strategies and increased investment plans in the semiconductor sector to accrue economic benefits and achieve self-reliance for safeguarding strategic interests. It is envisaged that the role of these electronic chips will become manifold in the coming days and semiconductor technology will become a reflection of soft power.
Ministry of IT & Telecom (MoIT) stated that the policy document was formulated based on a multi-stakeholder consultation and takes on a holistic approach to cover all segments of the semiconductor market. This policy will also serve as the foundation for the creation of a sustainable semiconductor ecosystem that builds on the potential of our large youth bulge and serves the needs of both local as well as international markets.
It also affords an opportunity for semiconductor startups and entrepreneurs to employ a skilled workforce to expand their businesses and become internationally competitive. It is envisaged that the policy will provide a much-needed boost to Pakistan’s economy, national security, and critical infrastructure, and ensure global competitiveness.
The last five years have witnessed major disruption in the semiconductor value chain due to the US-China trade war, famously known as the ‘Chip Wars’. It has not only exposed the World’s dependence on the USA for advanced technologies and on Taiwan for chip manufacturing but has also triggered a chain reaction in many countries to attain self-reliance in this critical technology.
To counter the potential restrictions and export controls, governments have introduced new strategies and increased investments to grow and strengthen semiconductor capabilities, to safeguard their interests.
For instance, China is aiming for 70 percent self-reliance by 2025 by pumping in $155 billion in the semiconductor industry, South Korea committing $450 billion for chip foundries and the USA is re-focusing on chip manufacturing by investing more than $52 billion.
Similarly, the EU has committed more than €11 billion and India announced a $10 billion package to focus on the local semiconductor ecosystem. More recently, Saudi Arabia announced the formation of a PIF-backed company Alat announcing a $100 billion in investments until 2030, semiconductors being one of its main thrust areas.
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We don’t make modern computer chips
We don’t make graphics cards
Tum aloo ke chips banao
We will innovate with sweet potato chips.
Computer chips=/= modern chips =/= aloo chips
sami bus conductor.