Security analysts consider semiconductors the most critical asset in the global race for technological supremacy. These tiny chips are the backbone of modern technology, powering everything from smartphones to Artificial Intelligence (AI) to artificial superintelligence (ASI) systems and cutting-edge military equipment. The geopolitical competition in the Indo-Pacific is a case in point, where major middle and small maritime powers are active within their perspectives, national interests, and outlooks.
The production of semiconductors has become a key geopolitical leverage amid the ongoing China-Western strategic competition due to their critical role in global technology and economic potential. In the evolving postmodern world order, it is interesting to analyze the writings on geopolitical, geoeconomic, and geostrategic walls as to how control of semiconductors can be a geopolitical leverage for technologically stragglers countries like Bangladesh amid China versus Western strategic competitions.
With the global semiconductor industry projected to reach $1 trillion by 2030, many countries are investing heavily in semiconductor manufacturing. With its growing economy and young workforce, Bangladesh must explore this sector as a potential technological advancement and economic growth driver. Bangladesh must come out of its small state psyche and embrace the challenges to reap the benefit of the strategic competition in its neighborhood. An insight into how semiconductor production is intertwined with geopolitical dynamics and where Bangladesh stands in this equation are briefly discussed below:
Semiconductors as a Strategic Asset. Semiconductors are the backbone of virtually every modern technological system, from smartphones and computers to military technologies. As the world increasingly depends on digital and electronic systems, controlling semiconductor production gives a nation substantial leverage in global trade, security, and technological innovation.
Semiconductor as a Tool of Influence. Control over semiconductor supply and manufacturing has become an essential geopolitical tool. Countries like the U.S., Japan, and Taiwan are forging closer economic and military ties—strategic alliances to secure semiconductor production capabilities and ensure they are not overly dependent on China. Semiconductors are central to trade disputes between China and the West. For instance, the U.S. has blacklisted Chinese tech giants and restricted access to vital semiconductor technologies, while China seeks to develop its indigenous semiconductor capabilities to counterbalance Western dominance.
Geopolitical Implications of Semiconductor Production Expansion. Countries that can produce advanced semiconductors (like the U.S., South Korea, Japan, and Taiwan) are shaping the global tech landscape and positioning themselves as dominant players in international diplomacy. Semiconductor production can act as a tool for economic leverage and national security. For example, the U.S. and Europe are ramping up investment in their semiconductor industries to ensure a competitive edge over China and other geopolitical rivals.
The Global Impact of Semiconductor Shortages. The global semiconductor shortage, which started in 2020, revealed how critical this sector is to the global economy. Supply chain disruptions in semiconductor production can affect the automotive and consumer electronics industries. As a result, nations are now focusing on bringing semiconductor production back to their shores to ensure supply chain resilience and reduce dependency on potential rivals.
China's Position in Semiconductor Production. China is both a major consumer and producer of semiconductors. It aims to become self-sufficient in semiconductor production through ambitious Made in China 2025 plans. However, China still depends on foreign semiconductor technologies for high-end chips, which gives Western countries, particularly the U.S., significant influence.
Western Control of Semiconductor Technologies. The U.S., South Korea, and Taiwan are leading global producers of advanced semiconductors, with Taiwan Semiconductor Manufacturing Company (TSMC) being the most dominant player. The U.S. controls much of the intellectual property for cutting-edge semiconductor technologies. This gives Western countries immense influence over the global supply chain.
The U.S. - China Semiconductor Tensions. Amid growing U.S.-China trade war tensions, semiconductors have become a point of conflict. The U.S. has imposed export controls on advanced semiconductor manufacturing equipment in China, mainly targeting companies like Huawei and SMIC (Semiconductor Manufacturing International Corporation). This limits China's ability to produce the most advanced chips, impacting its tech industry and military advancements. The U.S. and its allies are actively seeking to decouple from China in key technology sectors, including semiconductors, to reduce dependence on Chinese manufacturing and ensure the security of supply chains.
Semiconductors: China's Strategic Softness. China's manufacturing dominance is undermined by its heavy reliance on advanced semiconductor technology from the West and its allies, including Taiwan, Japan, South Korea, and Europe. This dependency leaves China vulnerable; any disruption in access could cripple its technological ambitions and alter the global power dynamic, highlighting semiconductors as pivotal in the battle for geopolitical dominance.
The Global Semiconductor Web and China's Strategic Dependence. Semiconductors power modern technology, but no country can produce advanced chips alone. The supply chain is globally interconnected. Taiwan leads in chip fabrication, South Korea and Japan provide key materials, the U.S. excels in chip design, and Europe's ASML (Advanced Semiconductor Materials Lithography) supplies critical EUV (Extreme Ultraviolet) lithography machines. Despite its manufacturing prowess, China heavily depends on semiconductor imports, spending more on chips than oil. This reliance exposes a strategic vulnerability, as any disruption in this global web would severely impact China's high-end manufacturing and economic stability.
The Achilles' heel: China's Semiconductor Struggle. China's quest for semiconductor self-sufficiency faces a significant obstacle: its inability to produce high-end chips. Despite massive investments under the "Made in China 2025" initiative, China remains dependent on EUV lithography machines made exclusively by ASML, which the U.S. has restricted from selling to China. This technological gap hampers the progress of Chinese giants like SMIC and Huawei, leaving China reliant on less advanced chip production and delaying its ambitions for technological independence.
AI and Military Power: China's Strategic Setback. China's AI and military technology ambitions face a critical hurdle due to its dependency on advanced GPUs (Graphics Processing Units). A U.S. company, Nvidia, dominates this market, controlling 90% of advanced AI GPUs. U.S. export restrictions have severely limited China's capacity to develop large-scale AI systems crucial for autonomous vehicles and next-generation military drones. As AI becomes central to future warfare, China's inability to access high-end semiconductors puts it at a strategic disadvantage against Western powers, underscoring its vulnerability within a supply chain dominated by the U.S. and its allies.
Balancing Power: Risks of the West's Semiconductor Strategy. The West's leverage over China through semiconductor control carries significant risks, including potential disruptions to the global supply chain and increased costs. In retaliation, China could exploit its dominance in rare earth elements or deepen alliances with non-aligned nations to counter Western influence. This strategic tug-of-war could reshape global trade dynamics and technological dependencies, demanding careful navigation to avoid unintended geopolitical consequences.
Technological Control: The New Global Power Game. Semiconductors have emerged as the centerpiece of modern geopolitical conflict, with the West leveraging its control over advanced technologies to maintain dominance over China. While this strategy curbs China's rise without direct confrontation, China's continued investment in domestic semiconductor production and strategic alliances could eventually shift the power balance. In this new era, technological supremacy is as crucial as territorial control, influencing economic landscapes and the future geopolitical order.
Where does Bangladesh stand in the emerging big game of semiconductors? The status of semiconductor usage in Bangladesh is evolving, though the country is yet to be a producer of semiconductors. Even though the current usage is mainly limited to Quality Testing, semiconductors play an increasingly important role in various sectors such as consumer electronics, telecommunications, automotive, and manufacturing, including the enormous potential in various blue economy-related activities.
Regarding dependency on semiconductors in Consumer Electronics and IT Devices, Bangladesh's increasing demand for mobile phones, tablets, and laptops contributes to the rising need for semiconductor components. While Bangladesh does not manufacture semiconductors domestically, products like smartphones are often assembled here. Still, the core semiconductor components are imported from countries like China, Taiwan, and South Korea.
In Telecommunications, Bangladesh has been experiencing rapid growth, particularly in mobile services and broadband internet. Semiconductors are essential for mobile base stations, 5G infrastructure, and network equipment. As Bangladesh focuses on improving its digital signature, semiconductors are becoming central to various projects like smart cities, smart grids, and advanced telecommunications systems. These initiatives rely on semiconductor-based sensors, microprocessors, and communication modules.
The Automotive Industry in Bangladesh is also starting to see semiconductor usage, particularly with the rise of electric vehicles (EVs) and automotive electronics. Semiconductors are critical for managing systems like battery management, motor control etc. As the country's automotive sector grows, there will be an increasing demand for semiconductors in producing vehicles, spare parts, and automotive electronics.
Regarding Renewable Energy and Smart Grids, Bangladesh has been focusing on expanding its renewable energy sector, wind and wave energy including solar power. As renewable energy infrastructure grows, semiconductors will become more integral to managing energy systems effectively.
While Bangladesh is a major player in the global textile and garment industry, there is potential for smart textiles and automation that relies on semiconductor technology. For example, wearable electronics and bright fabrics can be developed using semiconductor components.
Semiconductors are also becoming essential in healthcare applications, such as medical devices, monitoring systems, and diagnostic equipment. These devices depend on microchips for data processing, imaging, and connectivity to digital health platforms. To modernize Bangladesh's healthcare sector, the role of semiconductors will increase in medical technology.
However, there are Challenges and Limitations. Bangladesh is yet to have a domestic semiconductor manufacturing industry. The country relies on imports for the vast majority of semiconductor-based components. This makes the economy dependent on the global supply chain for high-tech products, leading to vulnerabilities in global shortages or disruptions. Moreover, the country does not yet have the capabilities for large-scale semiconductor production. This puts Bangladesh at a disadvantage in creating a self-sustaining high-tech industry.
The semiconductor industry also requires advanced technological and engineering skills. While Bangladesh is making strides in its engineering education, it still faces challenges in building a skilled workforce that can contribute to semiconductor design, research, and development.
Still, there are Opportunities for Growth. Given the increasing reliance on electronics, digital infrastructure, and renewable energy, there is a growing opportunity for Bangladesh to explore the development of a domestic semiconductor industry, whether through partnerships, investments, or even foreign joint ventures. Bangladesh has the potential to attract investment in its high-tech sector. Encouraging research in semiconductor technology and fostering a favorable environment for foreign investments could lead to significant economic growth in this sector.
Building a Semiconductor Future: Strategic Recommendations for Bangladesh. The following strategies can position Bangladesh as a competitive player in the global semiconductor landscape, offering it geopolitical leverage, specifically in the Indo-Pacific region. Bangladesh should focus on four key areas:
1. Skill Development and Education: Establish specialized training institutes and university programs and collaborate with global tech firms for internships and R&D partnerships.
2. Infrastructure and Ecosystem Development: Create Special Economic Zones (SEZs) with tailored infrastructure and promote supporting industries like chemical processing and precision machinery.
3. Incentives and Investment Policies: Implement investment-friendly policies, including tax incentives and public-private partnerships, while streamlining regulatory processes to attract foreign direct investment.
4. Research and Global Collaboration: Boost R&D funding in chip design and nanotechnology, create innovation hubs, and leverage diplomatic ties for strategic partnerships with global semiconductor leaders.
Semiconductor production has become a strategic asset in the China-Western geopolitical competition. As countries like the U.S. and China vie for technological and economic supremacy, control over semiconductor technology, production, and supply chains offers significant leverage. The U.S. and its allies seek to maintain a competitive edge by restricting China's access to high-end semiconductors while China aims for self-sufficiency in this critical field. In this context, semiconductors are not only an economic commodity but a powerful geopolitical influence and national security tool.
The Bangladesh government could play a key role in fostering the growth of the semiconductor sector through initiatives aimed at improving digital infrastructure, education, and research in relevant technologies. SEZ or investment incentives could encourage foreign companies to establish semiconductor-based production or R&D facilities in Bangladesh. As Bangladesh strives to diversify and modernize its economy and infrastructure, the role of semiconductors will become increasingly vital.
While manufacturing semiconductors in Bangladesh presents significant challenges, the potential rewards are substantial. With strategic investments, policy reforms, and international collaborations, Bangladesh can gradually build its semiconductor industry, contributing to economic growth, technological advancement, and digital sovereignty. The production of semiconductors could offer a geopolitical tool for Bangladesh for its promotion to developing status and become a middle maritime power to remain relevant in the Indo-Pacific strategic chessboard.
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