The Ministry of Information Technology and Telecommunication has drafted the “Semiconductor Policy and Action Plan,” aiming to boost Pakistan’s semiconductor industry with grants, subsidies, and incentives. Key proposals include extending Special Technology Zone (STZ) benefits, exempting import duties on equipment, offering soft loans with a 25% interest rebate, and providing 25% tax rebates. Additionally, the ministry plans to establish a Rs10 billion National Semiconductor Fund to offer grants, soft loans, startup support, and incentives to retain local talent and attract international firms and foreign diaspora over the next decade.
The ongoing EFF loan programme documents, uploaded in October 2024, underline that subsidies have been provided through low-cost financing and other concessions. These measures, while varied across industries, have made Pakistan’s financing and tax environment, net of subsidies, more competitive than peer economies and less favorable sectors.
The draft policy highlights how the past five years have seen significant disruptions in the semiconductor value chain due to the US-China trade war, often termed the “Chip Wars.” This conflict has underscored global dependence on the USA for advanced technologies and Taiwan for chip manufacturing. In response, countries are striving for self-reliance in this critical sector. China aims for 70% self-reliance by 2025 with $155 billion investments, South Korea has pledged $450 billion for chip foundries, the USA has committed over $52 billion to chip manufacturing, and the EU over €11 billion. India has launched a $10 billion package for its semiconductor ecosystem, while Saudi Arabia’s Public Investment Fund-backed company Alat plans $100 billion investments by 2030, with semiconductors as a priority.
The global semiconductor market comprises three primary segments: chip design, fabrication, and assembly, testing, and packaging (ATP).
