The semiconductor question: Where does Pakistan fit?

2026-03-28 - 00:11

Osama Tahir & Mahnoor Saleem SILICON is the new oil and Pakistan risks being left behind. While the 20th century revolved around competition for energy resources, the 21st century is being defined by control over semiconductor supply chains—the foundation of modern technology. From smartphones and artificial intelligence to defense systems and electric vehicles, microchips power the global economy. Yet despite a youthful population—64 percent under the age of 30—and high-purity silica reserves in regions such as Mianwali and Thatta, Pakistan remains largely absent from this strategic industry. Semiconductors have also become central to geopolitical rivalry. The intensifying competition between the United States and China has turned chip manufacturing into a matter of national security. In 2022, Washington approved the landmark CHIPS and Science Act, committing $52.7 billion in federal support for domestic semiconductor manufacturing and research, within a broader $280 billion technology investment framework. The objective is clear: reduce dependence on foreign supply chains and secure technological leadership. Beijing is pursuing a similar path. Since 2014, China has invested an estimated $150 billion to upgrade its semiconductor sector under a strategy of technological self-reliance. Chinese tech giant Huawei has emerged as a central player in this ambition and a focal point of US-China tensions. China aims to reduce reliance on imported chips and build a fully indigenous ecosystem spanning design, fabrication and packaging. Other countries already dominate key segments of the supply chain. Taiwan produces more than 60 percent of the world’s advanced chips, making it indispensable to global manufacturing. South Korea leads in memory chip production, while the Netherlands is home to firms that manufacture extreme ultraviolet lithography equipment—machines essential for producing cutting-edge semiconductors. Regional competitors are also moving quickly. India has launched an ambitious semiconductor mission backed by policy continuity and decades of investment in elite institutions. It is prioritizing Outsourced Semiconductor Assembly and Test (OSAT), a crucial downstream segment. Gujarat-based Kaynes Semicon has invested $260 million in an assembly and testing facility with government support, aiming to localize chip packaging capabilities. Pakistan, by contrast, has struggled with inconsistent policy direction. Analysts argue that the country’s challenge is not a shortage of talent but a lack of sustained planning and institutional continuity. Unlike India—which built strong industry-academia linkages through long-term investment in science and engineering education—Pakistan’s technology initiatives have often lacked follow-through. Importantly, Pakistan does not need to build multi-billion-dollar fabrication plants to enter the semiconductor race. Countries such as Vietnam and Malaysia have demonstrated that focusing on niche segments like chip assembly and testing can deliver meaningful gains. By hosting global technology leaders such as Intel, Samsung Electronics and Infineon Technologies, these countries built strong positions without dominating fabrication. Semiconductor production typically involves three stages: chip design, wafer fabrication in specialized plants and OSAT—assembly, testing and packaging. Pakistan currently has no significant presence in any of these. Wafer fabrication is the most capital-intensive stage and dominated by established global players. However, experts believe Pakistan could realistically enter chip design and OSAT with the right policies. Universities can play a leading role. Collaborative research at institutions such as National University of Sciences and Technology could support chip architecture and design capabilities, provided academic curricula are modernized. During the OSAT phase, silicon wafers are cut into individual chips and packaged for commercial use—an area where Pakistan could build cost-effective capacity. Dr. Salman Abdullah, formerly associated with Lumentum, argues that Pakistan’s barriers are structural rather than intellectual. While the country produces around 25,000 engineering graduates annually, few gain exposure to real chip manufacturing environments. The absence of a local industry has fueled brain drain, with more than 11,000 engineers reportedly emigrating in the past two years. A recently compiled Pakistan National Semiconductor Plan acknowledges these realities. Rather than pursuing costly fabrication plants, the plan prioritizes fabless chip design, verification, testing and packaging. The economic stakes are high: Pakistan’s 2024 import bill for electrical and electronic equipment reached $6.25 billion, contributing to a trade deficit exceeding $24 billion. Experts emphasize patience and strategic focus. Strengthening design and packaging capabilities can generate exports, create skilled jobs and build technical expertise. Structured scholarship programs should also reconnect Pakistan with its global scientific diaspora, while centralized research centers can allow institutions and startups to share costly infrastructure. The global semiconductor race is accelerating. Pakistan may not become a fabrication powerhouse soon, but securing a meaningful role in design and testing could protect its technological sovereignty and economic future. The silicon clock is ticking. —Osama Tahir is a software engineer specializing in data-intensive systems while Mahnoor Saleem is an Erasmus Mundus Scholar specializing in the politics of emerging technologies, corporate intelligence and espionage.