Pakistan finalising incentives plan for semiconductors industry

Keeping in view the national economy and security's reliance on semiconductors, the Ministry of Information Technology and Telecommunication has drafted a ‘Semiconductor Policy and Action Plan’ to transform Pakistan into a major hub of semiconductor design, manufacturing, and Assembly, Test, and packaging (ATP).

According to the draft policy, the Pakistan Semiconductor Policy is need of the hour. Five key elements of the strategy -- policy support and incentives, infrastructure development, human resource development, industry ecosystem building and collaboration, and research, development (R&D) and innovation -- will be used to set up a semiconductor ecosystem in Pakistan.

The policy proposes offering grants and subsidies to firms/organizations investing in semiconductor design, R&D and manufacturing. This will include extending STZ incentives to the semiconductor industry, exemption of import duties on equipment and machinery for the semiconductor industry, providing soft loans at 25 percent rebated interest rates for setting up industry and providing 25 percent tax rebates for employees working in the industry and R&D organizations.

Also, it proposes establishment of a national semiconductor fund of Rs10 billion to provide soft loans, grants, startup support, incentives to retain local talent and attract major international firms & foreign diaspora for the next decade. 

The semiconductor market can be divided into three segments – 1) chip design, 2) fabrication, and 3) assembly, test & packaging (ATP). The EDA tools & chip design market is mostly dominated by the USA whereas Taiwan is leading the chip fabrication segment.

In ATP (also known as OSAT), major market share is held by China. Different segments of the semiconductor industry have varying requirements for investment, HR, and ROI. It is evident that the fabrication and ATP do not guarantee an immediate profit or self-sustenance.