Industry consultant sees crucial need for raw materials supply
The Philippines can pick “low-hanging fruits” from the semiconductor industry and become a viable player in the global supply chain under a high tariff regime on exports to the United States, an industry consultant said.
Semiconductor manufacturers, he said, only need more support in finding enough raw materials for their products.
At a Monday Circle breakfast forum in Mandaluyong City yesterday, Cesar Tolentino, a consultant undertaking a study on the semiconductor industry, said big companies in specific segments already operate in the Philippines and can be the ticket for expansion.
Tolentino named some of these companies as Texas Instruments and Analog Devices for integrated device manufacture (IDM); ASE, Amkor Technology, and Nexperia for outsourced semiconductor assembly and test; Integrated Microelectronics Inc. (IMI); Cirtek, Ionics, and Amkor Technology for electronics manufacturing services (EMS); IMI, EMS Group, Ionics and Amkor Technology for contract electronics manufacture (EM) and IMI, Cirtek, Ionics, Taiyo Yuden for original equipment manufacture (OEM).
IDM involves the design, manufacture, assemble and test of its own products, while OSAT specializes in packaging semiconductors. EMS and CEM companies provide contract manufacturing services for other companies, while OEM firms design and sell their products under their own brand.
Tolentino cautioned, however, one constraint is the lack of raw materials to support these manufacturing companies.
“These raw materials — from gases, adhesives to lead frames — are imported from China and Taiwan. There is a need to set up manufacturing facilities for these components and raw materials,” Tolentino said.
Tolentino cites nickel as an example, in which the Philippines exports ore only to be imported by OSAT, EMS and OEM companies.
He said the lack of economies of scale in producing these raw materials makes it hard to attract investments.
Tolentino said local businesses could look into ancillary or support services for expanding semiconductor companies, such as engineering services, contracting services, and developers, among others.
