Chinese firm keen to invest in chip industry
A Chinese company is in the race to lay the foundation of a multibillion-dollar semiconductor design and manufacturing industry in Pakistan.
Sources told The Express Tribune that Longson Technology of China had shown interest in forging long-term partnership with Pakistan to develop the chip manufacturing industry. In this regard, the government has formed a committee for drafting a national semiconductor policy. The Special Investment Facilitation Council has given a deadline to the Ministry of ITT to draft the policy.
The policy will potentially comprise incentives for investors who are interested in pumping capital into the semiconductor industry.
According to sources, during a recent visit of the minister of state for IT to Beijing, the Chinese firm expressed interest in developing the chip industry in Pakistan. Now, Islamabad is following up with the plan discussed with the company.
The SIFC is already working on attracting foreign investment in different sectors of economy. Semiconductor is one of the key industries being targeted by the SIFC, which could draw investment of over $6 billion.
Experts stress that the government will be required to provide tax incentives and announce other facilitating programmes for foreign companies, especially the Chinese and US investors, to encourage them to set up chip designing centres. They revealed that the proposal of a government-to-business (G2B) chip designing facility and development of the semiconductor industry was floated in the SIFC in a bid to draw investment of billions of dollars.
It was suggested that Pakistan would have to start from testing and research and then the semiconductor industry should be developed. Estimates suggest that the setting up of a foundry for semiconductor manufacturing requires an investment of around $6-7 billion. Apart from capital, Pakistan lacks trained human resources as well.
Experts said that for developing the semiconductor industry, which was associated with smartphone and many other industries, the country would have to take small steps by winning the confidence of major companies like Intel, AMD, Nvidia, Qualcomm, MediaTek and Unisoc, which could invest in conducting varying tests.
To cope with the dearth of skilled human resources, they added, the government would have to update the curriculum to produce workforce with the required expertise.
Industry sources also said that the government needed to portray a softer image of the country where visitors and investors could come without security fears.
Mobile phones are a low-hanging fruit, especially in Pakistan, owing to their high sales volume. The government can help local brands to expand their market share, go for localisation of components and value addition, and protect intellectual property rights. China and India have adopted the same approach to help their local brands emerge as global giants.
Initial work on developing the semiconductor industry kicked off in 2022. At that time, the government formulated the Pakistan National Semiconductor Plan that laid out opportunities, challenges and recommendations. It pointed to several challenges in the way of developing the semiconductor industry, which was almost non-existent.
A major challenge is that the country does not have a good reputation when it comes to the ease of setting up and running a business. This can be overcome by highlighting the recent changes in the ease of doing business process.
It noted that Pakistani universities were not producing trained graduates, who could work on designing chips. This can be addressed by setting up advanced training centres, which will bridge the gap between the academia and industry.