Bangladesh’s next leap: From stitching garments to building silicon

In March 1996 I led the team that negotiated the sale of Apple's manufacturing site in Fountain Colorado. Apple had shut sites in the past, in Texas and Fremont Ca. but it had never sold a site. As part of that sale Apple guaranteed capacity to the buyer, SCI. This was not a forced sale, this was a strategic step in partnering with a world class manufacturer and importantly for Apple improving cash management. 

Apple had posted a $700m quarterly loss and was perilously close to running out of cash. This was something I was advised on when the sale stalled. I got a very clear message: "Get it Done Now" Strategic had quickly become tactical.

Apple had outsourced capacity in the previous 5 years, but solely in the notebook space to kick start its entry into the mobile space

What none of us appreciated at the time was that we'd just taken the first step down the road that led us to Foxconn a year later. Foxconn, originally a connector manufacturer, would go on to become the world's largest and most sophisticated technology product manufacturing organisation. 

Bangladesh is standing at a crossroad today, if it makes the right choices now, it can write its own version of that story.

A garment nation at a crossroads

Bangladesh has built one of the most remarkable textile manufacturing stories of the last generation. It is the world's second-largest garment exporter, a sector that has lifted millions out of poverty and turned Dhaka and Chittagong into serious industrial cities. But garments are, at their core, a low-margin, labour-arbitrage business, and that arbitrage is narrowing everywhere: wages are rising, automation is squeezing the stitching lines, and Vietnam, Cambodia and Ethiopia are chasing the same customers with the same playbook.

The next chapter can't be more of the same, dressed up differently. It has to be a genuine move up the value chain, from cutting fabric to assembling circuit boards, from garments to electronics, and in time to components and semiconductor-adjacent industries. That's not a leap of faith; it's almost step for step the trajectory Foxconn and China's Pearl River Delta followed a generation ago, and the lessons travel well.

How Apple actually built Foxconn

There's a popular story that Foxconn's rise was simply cheap labour and a compliant government. That's a small part of the truth, but it teaches the wrong lesson. Here is what I actually watched happen.

Apple concentrated volume instead of spreading it thin. A deliberate bet on a small number of partners (not vendors) backed by enormous, somewhat predictable order volumes, let Foxconn justify capital investment, tooling, cleanrooms, automated lines, that no one would fund for a fragmented customer base. Bangladesh's electronics ambitions today are scattered across dozens of small assemblers doing low-value final assembly. Two or three serious, well-capitalised electronics parks with guaranteed multi-year offtake would do more good than a hundred scattered incentive schemes.

Foxconn's transformation didn't happen because Taiwan or China had some inherent advantage. It happened because a government, a company and a customer aligned on a decade-long bet and followed through on the unglamorous parts, training, infrastructure, capital discipline, that don't make headlines but make factories run.

Apple co-invested in capability, not just capacity. We sent engineers to live on factory floors, paid for tooling, and taught precision techniques that didn't yet exist in consumer electronics assembly. This is the part governments most often skip: capability transfer has to be designed and funded, not assumed to happen by osmosis. Bangladesh needs joint technical academies and embedded foreign engineering teams, not just tax holidays.

The supply chain moved as one. Hundreds of component suppliers, connectors, casings, glass, batteries, clustered around Foxconn within a few years, because proximity cuts logistics cost and lead time close to nothing. A single flagship plant surrounded by nothing will always struggle; one surrounded by fifty suppliers within a two-hour radius becomes self-reinforcing.

The state was built ahead of demand, not behind it. Shenzhen and Zhengzhou had power, ports and logistics built out before the manufacturers arrived. Bangladesh's power reliability and port congestion are the biggest deterrents I hear from electronics manufacturers evaluating the country today. No labour cost advantage survives a factory that loses power for four hours a day.

Bangladesh isn't starting from zero

Bangladesh already has a young, trainable workforce disciplined by two decades of factory-floor culture, proximity to major Asian component supply chains, and a global electronics industry actively looking to diversify away from overexposure to China. 

Vietnam captured one wave of that diversification; India is capturing another. Bangladesh hasn't yet made its case, but the door has not closed. Domestic device assemblers already exist in mobile phones and appliances, proving the basic competence is there. What's missing is the leap from final assembly to precision component manufacturing, the leap Foxconn made between roughly 2001 and 2007.

An early signal: Contract manufacturers are already positioning

I don't have to speculate about whether serious operators see this opportunity, because I'm one of them. Ophir Global has taken a bullish enough view of Bangladesh to set up here, with plans to build out contract electronics manufacturing alongside our existing work, anchoring early volume domestically, where the relationships and trust already exist, while building the quality systems and certifications international OEM customers will eventually demand. 

It's a smaller, earlier-stage version of the same logic Apple used with Foxconn: concentrate real volume first, and let capability and reputation compound from there. If Bangladesh wants more of this, the policy environment needs to make it easy for operators like ours to be capitalised, certified and connected to export customers quickly, because the ones willing to make this bet are already circling.

The policy choices that actually matter

Having sat across the table from a good number of governments making this pitch, I'd offer three concrete priorities for the next five years.

Pick anchor partners and commit to them for a decade, not an election cycle. Electronics manufacturers make ten-year capital decisions; policy that changes with each government kills that calculation before it starts.

Fund the training pipeline before the factories arrive, not after. Technical institutes producing SMT technicians and precision toolmakers need to exist ahead of demand, the way Shenzhen's vocational schools did.

Fix power and logistics for industrial zones specifically, even if nationwide infrastructure takes longer. Dedicated power and expedited port corridors for designated electronics zones can be delivered faster than a full grid overhaul, and manufacturers will tolerate that distinction.

The stakes

Foxconn's transformation didn't happen because Taiwan or China had some inherent advantage. It happened because a government, a company and a customer aligned on a decade-long bet and followed through on the unglamorous parts, training, infrastructure, capital discipline, that don't make headlines but make factories run.

How you produce something says as much about you as the product you make. Bangladesh has already proven, in garments, that it can execute manufacturing with discipline. The question now is whether it can execute manufacturing with precision, and I believe it can, but only if it stops treating electronics as the next stage of the same low-cost strategy and starts treating it as the entirely different game it actually is.

Sketch: TBS

Joe O'Sullivan is CEO of Ophir Global and spent 15 years in global operations leadership at Apple Inc., including building the company's Asia operations and international procurement infrastructure. He now advises manufacturers and governments across South and Southeast Asia on industrial strategy.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.