For decades, Bangladesh’s economic identity could be stitched into a clothing label. Readymade garment (RMG) products transformed the country from an aid-dependent economy into a celebrated market presence. The industry became Bangladesh’s principal economic success story, its diplomatic calling card and, increasingly, its comfort zone. That comfort is now being disturbed.
Long celebrated as the world’s second-largest apparel exporter after China, Bangladesh is currently facing mounting competition from Vietnam. Whether the country has already slipped into third place will become clearer with the revelation of latest trade data and how apparel exports are classified, but the broader warning cannot be dismissed. Vietnam has strengthened its position through better logistics, deeper integration into global trade agreements, higher-value manufacturing, and a more diversified industrial base. Bangladesh, meanwhile, remains heavily dependent on cotton-based, lower-value garments while confronting rising energy costs, banking weakness, and increasingly demanding global buyers.
Losing a place in an international ranking would not, by itself, signal an economic crisis. The RMG industry remains indispensable. But it is a reminder that no comparative advantage lasts forever. A country that has relied on a single export engine for decades must begin thinking seriously about the next one. Prime Minister Tarique Rahman believes that next engine could be semiconductor chips.
At the National Semiconductor Symposium and BEAR Summit 2026, the government declared the industry a national priority, promising incentives, infrastructure, and support designed to position Bangladesh within one of the world’s most strategically important supply chains. It is an appealing vision. Chips power smartphones, vehicles, medical equipment, renewable-energy systems, artificial intelligence, and modern defence technologies. Governments across the world are investing billions to strengthen domestic capabilities and diversify supply chains in this regard.
Bangladesh already possesses some of the components needed to participate in chip manufacturing. It has thousands of engineering graduates, a small but dedicated chip-design sector, and a growing technical diaspora working throughout the global semiconductor chip ecosystem. The mistake would be assuming that participating in the semiconductor industry means building chip factories. The semiconductor chip value chain consists of three distinct activities: chip design; wafer fabrication; and assembly, testing, and packaging. Each step requires fundamentally different combinations of capital, expertise, and infrastructure.
Chip designing involves creating the architecture of integrated circuits and verifying that they function correctly before production. It is highly specialised engineering work that relies on skilled labour and sophisticated software. Wafer fabrication is the opposite. It requires multibillion-dollar fabrication plants, ultra-pure water, specialised chemicals, precision machinery, uninterrupted electricity, and a mature industrial ecosystem built over decades. Assembly, testing, and packaging make up the final stage, where manufactured chips are prepared for commercial use.
Bangladesh may have a realistic semiconductor future, but it does not yet have a realistic fabrication future. According to the Bangladesh Investment Development Authority, the country has more than 700 chip designers, produces over 20,000 computer and electrical engineering graduates annually, and earned more than $8 million from semiconductor exports in 2024. These are modest figures, but they demonstrate that the country is not starting from zero. Local companies already provide design, verification, and embedded systems services to international clients.
Bangladesh’s strongest opportunity therefore lies in becoming a competitive centre for chip design, verification, and product engineering rather than attempting to replicate Taiwan’s manufacturing model. Verification, physical design, and embedded software development all require specialised talent but comparatively modest physical infrastructure. A technically capable engineering workforce operating at competitive costs could become attractive to multinational semiconductor firms seeking to diversify operations beyond established centres such as India and Taiwan. However, inexpensive engineers alone do not create a chip industry. If they did, every developing country with engineering universities would already be designing chips.
Beyond having the right university degree, modern chip development requires practical expertise in electronic-design automation software, verification methodologies, hardware security, timing analysis, power optimisation, and rigorous engineering documentation. Universities therefore need access to industry-standard software, experienced instructors, well-equipped laboratories, internships, and opportunities for engineering students to complete real chip design projects.
The greater challenge for Bangladesh is producing engineers whom international companies will trust with intellectual property worth hundreds of millions of dollars. Trust may ultimately matter as much as technical capability. Semiconductor chip designs rank among the world’s most commercially sensitive assets. Investors will examine Bangladesh’s cybersecurity standards, protection of intellectual property, contract enforcement, regulatory predictability, and the integrity of its digital infrastructure. A single major incident involving stolen designs or compromised customer data could damage confidence across the entire sector.
Infrastructure presents another significant obstacle. Design companies can tolerate occasional power interruptions by relying on backup systems. Testing, packaging, and any future manufacturing operations cannot. Semiconductor businesses require electricity that is not merely available but exceptionally stable. Efficient customs procedures also matter because specialised equipment, engineering samples, and prototype components frequently move across borders under tight commercial deadlines. Bangladesh will therefore require reliable electricity, faster customs clearance, high-quality international digital connectivity, and specialised industrial zones capable of meeting the operational standards expected by global technology firms.
The government’s reported ambition to increase semiconductor exports from $8 million in 2024 to $1 billion by 2030 deserves particular scrutiny. A 125-fold increase in roughly six years would represent extraordinary growth, and such an outcome is conceivable only if one or more major multinational companies establish substantial operations in Bangladesh. As an organic target for the country’s existing industry, however, it appears highly ambitious. Overly optimistic targets carry risks as governments may begin measuring progress through company registrations, training certificates, or promotional announcements rather than genuine industrial capability. And, semiconductor industries are built through accumulated expertise, international credibility, and long-term investment.
A more realistic strategy would be to proceed in stages. During the next several years, Bangladesh should concentrate on expanding chip design, verification, embedded systems, and technical education. Government support should focus on design laboratories at universities, access to commercial design software, overseas fabrication opportunities for locally developed chips, and attracting international semiconductor companies to establish engineering centres in Bangladesh.
As experience and credibility grow, the country could gradually expand into independent testing laboratories, product validation, and advanced packaging. Only after developing reliable infrastructure, an experienced workforce, and sustained customer demand should Bangladesh consider any form of domestic wafer fabrication. Even then, the realistic objective would be mature or specialised chips used in industrial equipment, sensors, power management, and household electronics rather than competing directly with the world’s most advanced fabrication facilities.
Bangladesh can also create considerable value without manufacturing chips domestically by developing intellectual property tailored to national and regional needs, including agricultural sensors, flood-monitoring systems, smart electricity meters, medical devices, and power-management technologies, while relying on established overseas foundries for fabrication. Many successful technology companies own valuable chip designs without operating fabrication plants.
The semiconductor chip initiative therefore deserves both support and scrutiny. Diversifying beyond garments would strengthen Bangladesh’s economic resilience, create highly skilled employment, and integrate the country into one of the world’s fastest-growing industries. But success will not come from summit declarations, renamed technology parks, or ambitious export targets alone.
Bangladesh needs to become a trusted destination for engineering talent, dependable institutions, and world-class technical capability. If it can achieve those foundations, semiconductor design and related services could become a meaningful pillar of the country’s future economy.
The chips may be microscopic, but the challenge is vast. Bangladesh’s next economic transformation will depend entirely on the discipline with which it can turn its ambitions into reality.
Barrister Noshin Nawal is a columnist for The Daily Star. She can be reached at [email protected].
Views expressed in this article are the author's own.
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