Manufacturing sector emerging ‘hotspot’

Global real estate services firm JLL has considered the Philippines as among the emerging manufacturing destinations in the world, with the semiconductor industry grabbing the top rank as having the greatest growth prospect in the next few years.

In a statement, JLL said emerging manufacturing hotspots are implementing more policies that aim to boost local manufacturing industries, placing a premium on land availability and access to capital sources.

For the Philippines, specifically, opportunities are biggest in semiconductors as the country was one of seven that the US partnered with in line with the CHIPS Act, which aims to expand and diversify the US’ semiconductor supply chain.

Under the CHIPS and Science Act, the US government earmarked $500 million for the International Technology, Security, and Innovation Fund to be spent over the next five years in the partner countries.

JLL said key products in the semiconductors sector are integrated circuits, RF/microwave, and assembly and testing services.

Also, electronics and electricals were seen as emerging industries, as the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. reported a record in electronics exports of $49.1 billion in 2022.

Key products in the area are consumer and industrial electronics, as well as telecommunication equipment, JLL said.

Locations diversification

In the said analysis, JLL stressed that the next decade will accelerate shifting supply chains whereby manufacturing and production locations will diversify to multiple locations across Southeast Asia and India.

According to JLL, Southeast Asia and India stand to be main beneficiaries of companies diversifying manufacturing capabilities to complement bases in China.

For decades, China has dominated global manufacturing.

However, companies are increasingly diversifying their operations elsewhere, adding manufacturing bases outside of China to hedge against supply chain disruptions.

This diversification drive is fueling a boom in foreign direct investment for manufacturing in Southeast Asia and India, with both areas vying to become the next manufacturing powerhouse.