LAST week I shared my thoughts on China and America’s so-called chip war. This week, I want to speak about the Philippines’ own semiconductor interests.
But first some context. Countries that have the capacity to build chips are either trying to create, develop or revive theirs. China and the US are currently doing this. Japan is currently trying to revive their domestic chip industry. Europe and Russia are trying to catch up in both manufacturing and design.
And the reason is simple: semiconductors/chips are strategic resource. In the event of disruption and logistical problems, it’s important to have a localized chip manufacturing industry.
The good news is that the Philippines has a fairly robust manufacturing semis industry. It’s outdated, but according to the industry.gov.ph, “The Philippine semiconductors and electronics industry is the largest contributor to the country’s manufacturing sector. In 2013, the industry accounted for 41% of total exports, brought in US$ 918 million-worth of foreign and domestic investments, and employed 2.2 million workers. The potential for the industry remains high, as member firms intend to move to higher value-added manufacturing to meet global demand.”
Additionally, Southeast Asian countries also have healthy semiconductor manufacturing industries. So in theory, we are relatively healthy as far as semiconductor manufacturing is concerned. If chip logistics were disrupted tomorrow, we would be able to manufacture our own stuff.
But, as a country, I think we have more space for improvement, and I think we can turn to Taiwan as a guide.
The Taiwan Semiconductor Manufacturing Company (TSMC) was supported by its government in the goal of becoming the dominant chip manufacturer by acting as custom builders of other company’s designs. This private/public partnership is what allowed the TSMC to become one of the most important companies in the world.
We may not be able to make our own domestic TSMC, but I do think that given the disruption and uncertainty in the global semiconductor supply chain, we will be able to put together a more robust and profitable chip manufacturing industry./PN
