The semiconductor industry is a “very, very fertile area for development,” said President Ferdinand Marcos Jr. as he officially announced it as a top priority sector aimed at moving the Philippines up the global value chain from assembly to design and high-tech manufacturing.

Under his administration, the sector is being groomed as the key driver for economic growth with initiatives focused on expanding local manufacturing and tapping into new technologies.

The Philippines is blessed with minerals that global manufacturing and technology firms and militaries require. It is among the world’s top five countries for nickel, copper, and cobalt reserves, ranking fourth globally in copper ore (about 4.41 billion tons), fifth for nickel (~5.29 million tons), and holding approximately 286,000 tons of cobalt (~4 percent of global reserves).

The archipelago’s untapped critical and rare earth mineral reserves are estimated by the government to be worth $1 trillion, with only 5 percent of these reserves explored and mining contracts covering just 3 percent of them.

The poor track record of extracting minerals from the ground can be attributed primarily to the Philippine Constitution, which requires that the exploration and development of natural resources be carried out only by firms that are 60 percent Filipino-owned. As a result, mining contributes only about 1 percent to GDP.

The mining industry’s low contribution to the Philippines’ GDP highlights a sharp irony given the country’s high ranking in global nickel, gold and copper reserves. Despite its wealth, the sector struggles to deliver a substantial national economic impact, often yielding minimal employment (0.5-0.6 percent) and revenue, while operating primarily in mining-rich regions.

The irony is frequently discussed in the context of missed opportunities, poor revenue-sharing mechanisms and environmental damage.

A very good example of missed opportunities has been the failure to develop into a full-blown industry the abundant supply of semiconductor materials, which have the potential of turning the country into the richest in the Asia Pacific region.

The industry is recognized as having significant, partially untapped potential to move up the value chain from assembly and testing, design and wafer fabrication.

Here is a breakdown of potential, resources, and challenges based on current industry development.

1.Significant Natural Wealth (Raw Materials)

a) Mineral endowments: The Philippines is rich in essential minerals for electronics and green technology, including nickel, copper, cobalt, and gold.

b) Untapped Potential: Over $1 trillion in untapped mineral resources are estimated to exist in the Philippines.

c) Battery Materials: The country is a top-five global producer of nickel and cobalt, which are critical for electric vehicle (EV) batteries.

d) Emerging Sectors: The Philippines has potential in gallium arsenide (GaAs) wafer production, a component with growing demand in advanced technologies.

2. Industry Potential and Current Status

a) Major Global Player: The Philippines is the ninth-largest chip exporter globally.

b) Export Driver: In 2024, semiconductors and integrated circuits accounted for nearly 40 percent of the country’s total exports, amounting to $29.19 billion.

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