Philippine Electronics Industry Set for 10% Growth in 2022

The semiconductor and electronics industry is an important driver of the Philippine economy and the largest contributor to the country's manufacturing sector.

In 2021, Philippine electronics exports will be worth $45.92 billion, accounting for 61.5% of the country's total merchandise exports, 12.9% more than the previous year's $40.67 billion, a record high. Meanwhile, the Philippine semiconductor and electronics industry will directly/indirectly employ over 3 million people in 2021. These data are from the Semiconductor and Electronics Industries Foundation of the Philippines (SEIPI).

Dan Lachica is the President of SEIPI and a member of its Board of Directors, the organization's Strategic Direction Group (SDG). In an interview with EETimes Asia, a sister publication of EE Times, Lachica talked about the opportunities and challenges faced by the semiconductor and electronics industries in the Philippines last year, as well as key trends and growth drivers. He expressed his views on the continuing shortage of semiconductors and shared SEIPI's annual plan.

Question 1: How would you sum up the opportunities and challenges for the semiconductor and electronics industry in the Philippines over the past year?

Dan Lachica: Despite the COVID-19 pandemic, ongoing global chip shortages, and devastation from Super Typhoon Odette to the Visayas and Mindanao regions, the Philippine electronics industry will grow 12.9% in 2021, with exports It also hit a record $45.9 billion, which is 6% higher than 2019's $43.3 billion. Thus affirming the recovery of the electronics industry.

Although the semiconductor and electronics industry has recovered in 2021, it does not mean that its development has not encountered obstacles.However, our members have adjusted accordingly.

The Philippine government is our partner, including the Philippine Inter-Agency Task Force on the Management of Emerging Infectious Diseases (IATF-MEID), the Department of Trade and Industry (DTI), the Philippine Economic Zone Authority (PEZA), the Department of Science and Technology (DOST) and Agencies such as the Anti-Red Tape Authority (ARTA), these government agencies have been working with us to support the growth of the electronics industry. We look forward to further improving the business environment in the Philippines by working with government agencies.

Question 2: Looking ahead to 2022, which market segments are you optimistic about for growth? What trends are driving the Philippine semiconductor and electronics industry?

Lachica: Electronics Industry The recovery in global demand has driven the recovery of the electronics industry starting in 2021, especially the technologies that support the work-from-home model, including telecommunications, consumer electronics and electronic data processing (EDP) products.

Among the Philippine electronics manufacturing exports, the highest growth rate of communications electronics has been 138%, driven by strong growth in data consumption and broadband usage during the epidemic, and we believe this trend may continue until the end of 2022. Because the Philippines and other countries have yet to fully recover from the pandemic, industry leaders are realizing that "accelerating business digital transformation" can increase resilience and speed.

The consumer electronics and EDP industries have also seen growth as users increasingly demand gadgets and smart devices, with Philippine consumer electronics exports growing by 19.4% in 2021.

At the same time, technological advancements in the medical field are driving the growth of the telemedicine and medical electronic devices market.

Some of the technology trends we are seeing are 6G, Metaverse, automotive AI, advanced driver assistance systems (ADAS), augmented reality (AR), connected cars, electric vehicles (EV), and robotics and automation.

Question 3: Do you think the shortage of parts will continue in 2022? How can SEIPI help the local industry solve this problem?

Lachica: Global semiconductor demand is still very strong, but the supply of semiconductor wafers has not yet normalized. The United States, China, Taiwan and South Korea are all competing for wafer production capacity. According to CNBC, technology giants such as Apple, Amazon, Google, Meta, Tesla and Baidu have begun to develop their own chips, incorporating some chip development and design work into the company. This means that in the future they will be able to provide consumers with more product offerings.

However, this does not mean that the chip shortage will end soon, because the continuous imbalance of the global supply chain, the long delivery time of semiconductor process equipment, the ongoing Sino-US trade war, and the chain reaction caused by the conflict between Russia and Ukraine will all affect the semiconductor supply chain. bring negative effects.

At the same time, we also hope that semiconductor equipment manufacturers can have sufficient capital and production capacity to ensure the supply of semiconductor wafers.

Question 4: What initiatives does SEIPI have in promoting the development of semiconductor and electronics manufacturing in the Philippines?

Lachica: SEIPI is working with DTI and DOST to implement its electronics industry roadmap, the Product and Technology Comprehensive Strategic Plan (PATHS). PATHS identifies specific products and technologies that the semiconductor and electronics manufacturing industry will pursue over the next five years to leverage advanced technologies to increase the Philippines’ global market share. According to this roadmap, SEIPI will develop an IC design laboratory to cultivate IC design talents needed by the industry. We plan to build a lab-scale fab to produce lab-designed IC prototypes, reducing prototype manufacturing costs and lead times, and ensuring IP protection.

To support the PATHS program, we have established Technical Working Groups (TWG’s). The Industry 4.0 TWG was established to facilitate the adoption of Industry 4.0 by SEIPI manufacturing members. SEIPI member companies and universities collaborate in the IC Design Technology Working Group (TWG) to identify and address needs that hinder the development of the IC design industry, including talent development and supply and the use of EDA tools. The proposal is an industry-academia-government (DTI, DOST, CHED and TESDA) collaboration with the help of international resources.

The SEIPI Industry Skills Council (SSC) was established in partnership with the Philippine Educational Enterprise (PBEd) under the 'Viable Future (AFW)' programme funded by the Australian Department of Foreign Affairs and Trade (DFAT). It aims to minimise the skills gap between tertiary graduates and industry needs.

To reduce the industry's reliance on imported materials and minimize dollar spending in the country, SEIPI launched its parts localization program.

Question 5: What plans does SEIPI have this year?

Lachica: According to the PATHS plan, we need to establish an integrated circuit design training laboratory (ICD Training Lab) to build a laboratory-scale semiconductor wafer fabrication facility, which will be led by DOST. The project aims to combine the capabilities of DOST's Advanced Institute of Technology (ASTI), Philippine Semiconductors and SEIPI with IC design companies and related members from universities to jointly develop the IC design industry in the Philippines. We will focus on the transformation and innovation of knowledge, and pursue the cultivation of talents and the research and development of products, which are also necessary for the development of the semiconductor and electronic industries.

Our Industry 4.0 TWG has developed a baseline survey to assess the readiness of manufacturing members. This information will be analysed and fed back to the business, and we will encourage members to participate in a comprehensive assessment in order to address AOIs (areas of improvement), accelerate their digital transformation and enhance their global competitiveness. The project is also a collaboration between industry and government agencies, especially DTI and DOST.

The Skills Council for Industry (SSC) will conduct activities to address the mismatch between the skills of HEI (Higher Education Institutions) and TVET (Technical and Vocational Education and Training) graduates and industry requirements.

The SEIPI Association of Purchasing Managers (ASPM), Network Council (NWC) is leading the planning and execution of the parts localization program. The goal is to identify local manufacturers who are willing to invest and gain qualifications/certifications to produce top imported materials; and influence the constructive export of locally manufactured ICs and passives.

We will also continue to advocate for industry attention to some government policies and regulations.

During the global health crisis, SEIPI continues to help members ensure the health and safety of their employees. We order AstraZeneca (AZ) and Moderna vaccines for member companies through Go Negosyo and the ICTSI Foundation, respectively. Through our partnership with GoNegosyo and DOH, we have doubled the AstraZeneca vaccine order, donating the vaccine to the government to provide free AZ booster shots to member companies.

To keep members and partners engaged, SEIPI holds a virtual General Meeting of Members (GMM) every quarter, covering pressing industry issues, technology trends and company best practices. SEIPI also hosts a series of webinars to train and equip the industry's valuable human capital. SEIPI will hold the Philippine Semiconductor Electronics Conference (PSECE) 2022 in November this year, after a two-year hiatus, as the COVID-19 situation improves. Over the years, PSECE has grown into a global event that provides businesses with a platform to promote products, benchmark standards, share best practices, develop business connections and strengthen business-government relationships through exhibitions, seminars and B2B events.

Question 6: What is your outlook for 2022? How do you see the development of the semiconductor and electronics industry in the Philippines?

Lachica: With the transition of the COVID-19 pandemic, easing of quarantine restrictions and strong global demand for electronics, we expect the electronics industry in the Philippines to grow by 10% in 2022. We expect this to happen despite uncertainties due to unforeseen events such as geopolitical turmoil, possible Covid-19 mutations, and consequent supply chain disruptions.