By Qudsia Bano

The rapid expansion of the global semiconductor industry, driven by artificial intelligence (AI), cloud computing, data centres and advanced electronics, is creating new opportunities for Pakistan's engineering sector to integrate into international technology supply chains and diversify the country's export base, experts say.

According to the latest forecast by the World Semiconductor Trade Statistics (WSTS), the global semiconductor market is expected to reach approximately $795.6 billion in 2025, representing a 26.2% year-on-year increase. The upward revision reflects stronger-than-expected demand for logic and memory chips used in AI systems, cloud infrastructure and advanced consumer electronics.

The industry's strong momentum has continued throughout the year. Data from the Semiconductor Industry Association (SIA) shows that global semiconductor sales reached $57 billion in April 2025, marking a 22.7% increase over April 2024. The association attributed the growth to sustained demand across computing, communications and industrial applications.

While advanced semiconductor fabrication remains concentrated in a limited number of economies, analysts believe significant opportunities exist throughout the industry's broader supply chain. Rather than manufacturing chips, Pakistan can position its engineering sector as a supplier of industrial components, precision metal parts, industrial tooling, electronics assemblies, cables, connectors, testing equipment, power systems and specialized machinery used in semiconductor manufacturing and packaging.

Pakistan's engineering sector has already been identified as a priority export industry under the Ministry of Commerce's Engineering Goods Export Strategy, which aims to enhance competitiveness, promote value addition and integrate domestic manufacturers into global industrial supply chains.

Speaking to Wealth Pakistan, Muhammad Ali, Manager of Business Development at Kamand Private Limited, said Pakistan's engineering firms have a realistic opportunity to participate in the semiconductor value chain by supplying specialized industrial components instead of attempting capital-intensive chip fabrication.

"The global semiconductor industry requires a vast network of suppliers providing machined components, industrial automation equipment, electrical systems and precision engineering services. Pakistani manufacturers already possess capabilities in several of these segments and can target export markets through quality certification and technology partnerships," he said.

Ali noted that expanding semiconductor investment across Asia has increased demand for ancillary products and engineering services. He said Pakistan's competitive labour costs and growing manufacturing base could help local firms secure contracts from regional suppliers serving semiconductor hubs in China, Malaysia, Vietnam and Singapore.

He added that Pakistan's Special Economic Zones under the China-Pakistan Economic Corridor (CPEC) could also help attract technology partnerships and strengthen linkages with regional manufacturing ecosystems, enabling local engineering firms to integrate more effectively into global supply chains.

Muhammad Ahmed, Assistant Manager of Engineering at MicroTech Industries (Pvt) Ltd, said the AI-driven expansion of the semiconductor market is creating opportunities for engineering exporters worldwide, particularly in industrial electronics and precision manufacturing.

"Pakistan may not immediately enter advanced semiconductor fabrication, but it can build a strong presence in supporting industries. Engineering firms producing electrical equipment, industrial controls, metal fabrication products and automation solutions can benefit from rising global demand linked to semiconductor production," he said.

Ahmed emphasized that Pakistan should focus on upgrading technical skills, obtaining international certifications and meeting global industrial standards to satisfy the requirements of multinational technology supply chains. He added that stronger collaboration among engineering firms, universities and technology parks could help develop the skilled workforce needed to capitalize on emerging opportunities.

Industry observers believe Pakistan's growing focus on engineering exports, combined with rising global semiconductor demand, offers an opportunity to reduce reliance on traditional textile exports. Rather than competing in capital-intensive chip manufacturing, the country can establish itself as a reliable supplier of engineering products and industrial services to one of the world's fastest-growing technology industries, strengthening export diversification and long-term industrial competitiveness.

Credit: INP-WealthPk