Pakistan’s Federal Government to Launch National Policy for Semiconductor Manufacturing

Islamabad:The federal government is preparing to introduce a **National Semiconductor Policy** aimed at boosting local manufacturing of semiconductors, an essential component in the technology industry. The **Ministry of Information Technology** has confirmed that the policy will be launched soon, with a focus on local production, import of raw materials, industry facilities, and export guidelines. This move is expected to provide a significant boost to Pakistan’s tech sector and enhance its competitiveness in the global semiconductor market.

### **The Importance of Semiconductors and Global Industry Trends**

Semiconductors are a critical element in almost all electronic devices, from mobile phones to cars, and they are essential for the functioning of data centers and other advanced technologies. As a fundamental component of modern electronics, semiconductors play a vital role in national security, with countries increasingly viewing semiconductor production as a matter of strategic importance.

In recent years, semiconductors have gained global recognition not just for their technological importance but also for their relevance to national security. Smart chips used in advanced technology, including military applications, are part of this growing trend. The global race to dominate semiconductor production involves key players such as the **United States**, **China**, **Taiwan**, and now **India**, with the latter aggressively pushing to establish itself as a semiconductor manufacturing hub.

### **India’s Strategy and Pakistan’s Opportunity**

India, with its strong focus on software development, has also set its sights on semiconductor manufacturing. Under Prime Minister **Narendra Modi’s** leadership, India has launched several initiatives to localize semiconductor production. The Indian government has even declared semiconductor manufacturing a national mission and introduced a special program to attract major companies, particularly those from Taiwan and the United States, to invest in India.

In contrast, Pakistan, with its vast labor force and several untapped opportunities, is well-positioned to benefit from the semiconductor industry. While India has emerged as a software powerhouse, its hardware manufacturing capabilities are still limited. Pakistan can fill this gap and emerge as a strong competitor by promoting semiconductor manufacturing.

### **Key Components of Pakistan’s Semiconductor Policy**

According to the Ministry of Information Technology, the upcoming **National Semiconductor Policy** will reflect the government’s priorities in the IT sector. The policy’s main objectives will include local production, export growth, and investment promotion. Key highlights of the policy include:

– **Encouraging Local Production and Export**: The policy will focus on increasing local semiconductor manufacturing to meet domestic needs while promoting exports.
– **Support for Research and Development**: The government plans to provide assistance in the research and development sector to foster innovation.
– **Incentives for Manufacturers**: Semiconductor manufacturing companies will receive incentives, including tax breaks and facilities for importing machinery.
– **National Semiconductor Fund**: A proposed **10-billion-rupee National Semiconductor Fund** aims to support the development of this industry. Additionally, the policy will set long-term goals for the next decade to boost domestic production.

### **Special Grant Programs for Semiconductor Startups**

One of the proposed measures under the new policy is the provision of **grants** ranging from **2.5 million to 10 million rupees** for semiconductor manufacturing startups. These grants, to be disbursed from the newly established semiconductor fund, aim to promote innovation and encourage new businesses in the sector.

**Aftab Ikram Sheikh**, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), highlighted the importance of a comprehensive policy for supporting startups. He believes that if the government effectively manages the provision of funds, it can create significant opportunities in hardware manufacturing, much like Pakistan’s success in software development.

### **The Importance of Access to U.S. Semiconductor Market**

Currently, the United States is the largest buyer of semiconductors globally, and India has focused much of its efforts on engaging U.S. companies for semiconductor production. **Rehan Siddiqui**, Deputy Convener of the FPCCI Standing Committee on IT, suggested that Pakistan should also adopt a similar strategy. Securing access to U.S. markets could significantly benefit Pakistan’s semiconductor industry, especially since U.S. companies are often keen to invest in technology transfer to countries like Pakistan.

Pakistan should strengthen its **G2G (Government-to-Government)** and **B2B (Business-to-Business)** relations with the U.S. to attract investments and improve the local semiconductor industry. Siddiqui emphasized that engaging Pakistani investors and creating a conducive environment for them is critical for this initiative’s success.

### **Challenges in Developing Pakistan’s Semiconductor Industry**

One of the key obstacles Pakistan faces in developing its semiconductor industry is the lack of proper infrastructure. **Aftab Ikram Sheikh** pointed out that before the National Semiconductor Policy is implemented, the government must address issues related to infrastructure. This includes attracting global investors and ensuring that private-sector collaboration can thrive.

Another critical factor is energy costs. In India, the electricity rate for semiconductor manufacturing is about **6 cents per kilowatt-hour**, whereas Pakistan’s rate is **15 cents** per kilowatt-hour. This significant difference makes it challenging for Pakistan to compete with countries like Taiwan, where the electricity cost is **8 cents** per kilowatt-hour.

To overcome these challenges, Pakistan will need a robust plan to train engineers and skilled workers for the semiconductor sector. The private sector can play a vital role in supporting these initiatives by offering training programs and promoting skill development.

### **Conclusion: A Promising Future**

The introduction of a National Semiconductor Policy marks a significant step in Pakistan’s journey to becoming a key player in the global semiconductor industry. With careful planning and strategic investment, Pakistan can tap into the vast potential of semiconductor manufacturing, bridging the gap between hardware and software capabilities. By doing so, it can open new avenues for economic growth, enhance technological innovation, and secure its position as a leading tech hub in the region.