The Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) expects modest 1 to 2 percent growth in exports this year, revising its previous projection of a flat performance slightly upward given the country’s new incentives law.
The outlook also improved after it factored in the relatively low tariffs expected to be slapped by the US on Philippine exports.
Dan Lachica, SEIPI president, told reporters on the sidelines of the Aboitiz InfraCapital Industrial Summit on April 25 that the group noted growing interest from foreign investors, including those relocating from China, with the passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE More) Act, which introduces attractive incentives.
Lachica said CREATE More and the US announcement of 17 percent reciprocal tariffs on the Philippines puts the country in a “sweet spot” against competitor countries like Vietnam, Taiwan, and China.
He declined to identify these companies.
In an earlier interview in March, Lachica said SEIPI expects flat growth this year due to the slow recovery of demand in the global market.
Data from the Philippine Statistics Authority showed that electronics and semiconductor exports reached $39.08 billion in 2023, up from $41.91 billion in 2023.
Lachica on April 28 said SEIPI expects non-tariff US initiatives like the Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act of 2022, which includes a $500-million International Technology Security and Innovation Fund allocated to seven countries, including the Philippines, could resume this year.
The initiatives are meant to help advance local semiconductor and electronics industry skills.
Lachica said SEIPI is working with Arizona State University to “resume the workshops and the training of workers.”
He said that initially, the US had projected these initiatives could triple the value of semiconductor exports, which are currently about $30 billion annually.
“Of course, assuming everything works (positively) with the tariff and the expansion (plans),” he added.
Lachica said SEIPI is batting for the inclusion in the industry’s new roadmap of the group’s proposal to establish a tabletop or lab-scale wafer fabrication plant to move up the value chain; “otherwise, we will be stuck in assembly, test, and packaging.”
Wafer fabs process raw semiconductor or silicon wafers into finished integrated circuits (ICs).
The Philippines relies on imports from Taiwan for its wafers, which are tested and assembled locally into ICs, Lachica said.
He noted the huge cost and the need to upskill workers and deliver a proof of concept. He proposed that a wafer fab be undertaken via collaboration between the government, the private sector, and academia.
Lachica said a lab-scale wafer fab costs around $10 million, compared with a full-scale one, which costs $10 billion.
He added that there is enough demand for commercial wafers in the production of power devices and automotive electronics.
“We don’t have to go to the five, 10-nanometer wafers,” Lachica said, referring to those used for high-end smartphones and high-performance computing.
On the scheduled trip of Trade Secretary Cristina Roque and Secretary Frederick Go to the US from April 29 to May 2 to negotiate on the tariffs, Lachica said: “Obviously, what we want is zero tariff. Right now, for ICs in the semiconductor side, the reciprocal tariffs are at zero… we hope it stays that way.”
He added that the industry’s biggest exposure to the US tariff is on electronic manufacturing services, such as renewable energy, transducers, passive components, consumer electronics, and office products.
There are about 170 tariff lines in the semiconductor and electronics to be affected by the US tariffs.
