Why Bangladesh charts a design-first path into semiconductors, ditching wafer fabrication
Businesses and experts said this targeted, talent-first strategy just received its most significant government support, with the FY2026-27 budget codifying a decade of stability for tech investors
Highlights:
- Bangladesh targets chip design, testing, packaging; avoids costly fabrication initially
- Government extends semiconductor tax incentives and duty cuts until 2031
- Goal: grow semiconductor exports from $8 million to $1 billion
- Bangladesh produces thousands of engineering graduates supporting semiconductor talent growth
- Local firms already provide international chip design and engineering services
- Skills training, infrastructure, and research investment remain major challenges
Bangladesh has made a calculated bet to leapfrog into the global semiconductor value chain, deliberately bypassing the expensive wafer fabrication race to stake its claim in high-value chip design, testing, and packaging.
Businesses and experts said this targeted, talent-first strategy just received its most significant government support, with the FY2026-27 budget codifying a decade of stability for tech investors.
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In a predictable policy move, the government has locked in sweeping customs duty and VAT concessions until June 2031. By extending these exemptions across Electronic Design Automation (EDA) tools, proprietary semiconductor design software, advanced packaging machinery, and specialised testing equipment, policymakers are handing local firms and global entrants the long-term predictability required to scale, businesses said.
The fiscal runway is designed to aggressively fast-track an industry currently generating a modest $8 million in annual exports into a $1 billion powerhouse by 2030. According to the Bangladesh Investment Development Authority (Bida), the blueprint aims to draw foreign and domestic capital into integrated circuit (IC) design, outsourced semiconductor assembly and testing (OSAT), and cutting-edge research and development.
MA Jabbar, president of the Bangladesh Semiconductor Industry Association (BSIA), described it as one of the most important policy decisions for the sector.
"Semiconductor investments, talent development and ecosystem building are long-term endeavours. Companies do not make strategic decisions based on one- or two-year incentives. The extension until 2031 sends a strong signal that Bangladesh is serious about developing a semiconductor ecosystem," he said.
Jabbar said Bangladesh's immediate opportunities lie in IC design, design verification, FPGA and embedded systems, semiconductor testing, packaging and engineering services, rather than wafer fabrication, which requires massive capital investment and decades of technological expertise.
ABM Harun-ur-Rashid, professor of Electrical and Electronic Engineering (EEE), Buet, and a member of Bida's national semiconductor taskforce, said the reduced VAT and customs duties would significantly lower costs for universities, startups and entrepreneurs engaged in semiconductor research and chip design while encouraging investment in OSAT and packaging.
Bangladesh's biggest strength, he said, is its engineering talent. The country produces around 13,000 electrical and electronic engineering graduates and about 26,000 computer science graduates each year, creating a sizeable pool of engineers for semiconductor design and related services.
Prof Harun said the taskforce's roadmap prioritises semiconductor design in the short term, testing and packaging in the medium term and wafer fabrication only as a long-term objective.
That strategy is already beginning to take shape. Companies such as Ulkasemi, Neural Semiconductor, Prime Silicon Technology and Siliconova are providing semiconductor design and engineering services to international clients.
Siliconova, for example, offers services ranging from Register Transfer Level (RTL) design and design verification to physical design, analog and mixed-signal layout, RF design, firmware development and chip packaging.
"Bangladesh currently participates in semiconductor design services and is now working towards chip testing and packaging services," said Md Shafil Hosain, director and technical programme manager at Siliconova.
Shafil said Bangladeshi engineers are already working on advanced chip design projects spanning technology nodes from 180 nanometers to two nanometers. He argued that the biggest misconception is that Bangladesh must first build an expensive fabrication plant, whereas the global semiconductor value chain begins with chip architecture, design, verification and intellectual property development – areas where the country can already compete.
Despite the policy momentum, experts say incentives alone will not be enough.
Prof Harun noted that although universities produce thousands of engineering graduates annually, most require around a year of specialised Very Large Scale Integration (VLSI) training before they become industry-ready.
He also pointed to a shortage of experienced engineers capable of leading complex chip design projects and called for centres of excellence, stronger university-industry collaboration, wider access to industry-standard EDA tools and sustained government-backed training programmes.
Jabbar identified advanced testing facilities, packaging infrastructure, research funding, stronger intellectual property protection and closer industry-academia collaboration as the next priorities for building a complete semiconductor ecosystem.
He also called for easier access to cash incentives, rent-free land in Hi-Tech Parks for packaging and PCB-related activities, and greater government support to attract foreign investment.
The global semiconductor market, driven by demand for artificial intelligence (AI), electric vehicles, 5G and automation, is projected to surpass $1.3 trillion in 2026, according to market research firm Gartner, and continue its strong growth trajectory toward $1.6 trillion by 2030.
Compared with regional competitors, Bangladesh remains at an early stage. India has committed about $10 billion under its semiconductor mission to build fabrication plants and expand chip design and manufacturing, while Vietnam aims for $25 billion in annual semiconductor revenue by 2030 and $50 billion by 2040, along with 100 design firms, 10 packaging and testing plants, and over 50,000 engineers.
However, Jabbar believes, Bangladesh has the potential to become a regional hub for semiconductor design, verification, testing support and engineering services by 2031. Prof Harun's roadmap is even more ambitious, envisioning at least 50 VLSI design companies, three semiconductor testing facilities, two packaging industries and the country's first global semiconductor design centre by the end of the decade.
