U.S. sees Phl as significant semiconductor sector player

The United States has once again affirmed that the Philippines remains a potential downstream manufacturing site when it comes to producing silicon wafers, an integral component of producing semiconductor materials such as microchips used in gadgets and other equipment.

In a roundtable discussion with selected members of the media on Tuesday, US Assistant Secretary of State for the Bureau of Economic and Business Affairs Ramin Toloui said the US government treats the Philippines as a significant market for semiconductors after the US lawmakers passed into law the CHIPS and Science Act in 2022, allocating nearly $53 billion to rebuild its domestic chip supply chain and invest in future research and development.

Of the said total, $39 billion is dedicated to initiatives that boost semiconductor manufacturing, particularly the production of silicon wafers in the US.

“Part of that funding was also in deepening international partnerships. In particular, there is a need for additional manufacturing and the Philippines has been a significant player in the testing and packaging component or the downstream manufacturing of semiconductors,” he said.

Toloui stressed that with semiconductors demand poised to continue to grow, as microchips will be also used in medical devices, and automobiles that are ubiquitous to the daily lives of every citizen in the world, the demand for downstream manufacturing is also seen to tremendously increase.

“We want to have a resilient and substantial capacity for that because we don’t want interruptions in the semiconductor supply chain just like what happened during Covid-19. The Philippines has the potential to play an incredibly important role in the global semiconductor supply chain. We have selected the Philippines as one of the five countries to partner with in our International Technology Security and Innovation (ITSI) Fund,” he explained.

The Philippines, under the CHIPS Act, is set to benefit from the $500-million ITSI Fund for five years, or $100 million for each year.

The CHIPS Act supports the diversification of the supply chain of US companies with rich natural resources and is a strong ally of the US government.

Targeted investments

“What we want to do is make some small, targeted investments with this fund and help catalyze much larger and more important investments in the private sector,” he said.

Toloui said his team has already engaged with the Organization for Economic Cooperation and Development of the US State Department to conduct a study of the assembly, testing, and packaging ecosystem in each of the five countries that are beneficiaries of the ITSI Fund, namely Vietnam, Panama, Puerto Rico, Mexico and the Philippines.

Electronics and semiconductor products are the Philippines’ top merchandise export, sharing more than half of the country’s total export revenues.

The industry generated up to 2.5 million direct and indirect jobs.

“I am pleased to say that the Philippine government, the private sector, and other stakeholders have stepped forward to engage the OECD on the study so that we have a strong base or identifying what are the steps that the Philippines can take to maximize investments in the semiconductor sector,” he said.

Workforce development

The US official said that the kind of areas that came up with the discussion in his short visit in Manila is workforce development on how the US government can make sure that the Philippine educational system is producing the engineers, the technicians that are critical to the assembly, testing and packaging facilities that will soon to be established in the country.

Aside from this, Toloui said that another field that he has tackled with government regulators is the energy sector, as investments in the sector are imperative to ensure reliable supplies of power in the country.

“Success in semiconductor operations requires cooperation, the government, private sector, and the academe because what is required in terms of the workforce, infrastructure, and policy framework requires a dialogue.

To recall, Trade Secretary Alfredo Pascual has been pushing for the harnessing of critical minerals in the country, stating that the Philippines has a treasure trove of mineral resources, particularly green metals, such as copper, cobalt, and nickel.

He said the country has 2.1 billion metric tons of nickel, 6.9 million metric tons of copper, and 260,000 metric tons of cobalt used in the manufacturing of green metals and electric vehicles.