Philippine chip industry wants help from Taiwan’s TSMC
The country wants to diversify beyond chip testing and packaging, a less advanced part of the manufacturing process that carries thin profit margins
THE Philippines has been trying to enlist Taiwanese chip giants in an effort to expand in semiconductors, a bid to catch up with its neighbours who are emerging as significant suppliers in the industry.
The country has reached out to companies including Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC), said Dan Lachica, head of the South-east Asian country’s main electronics industry group.
This comes as it seeks equipment and expertise to build out chip fabrication operations.
The association is working with Philippine officials in Taiwan to talk with potential partners.
Lachica added: “What I am hoping for is TSMC or UMC or some other company aspiring for wafer fabs overseas to consider: ‘Send us your depreciated equipment and, in exchange, we’ll train the Filipino workers that you can deploy in your global operations’.”
The country of more than 100 million people trails neighbours such as Malaysia and Singapore in the complex industry of chip manufacturing, where plants can require billions of dollars in initial investment.
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Taiwan is the world leader, and its companies – including TSMC – have been expanding overseas to alleviate potential risks related to tensions between the island and the Chinese government.
TSMC representatives did not respond to a request for comment, while a UMC spokesperson said that it was the company’s policy not to comment on market speculation.
The Philippines has been betting that its low costs and ample workforce could help attract manufacturers.
Talent shortage is one of the main challenges for global chipmakers from the US to Malaysia. The industry will need more than one million additional skilled workers across the world by 2030, Deloitte has estimated.
Taiwan and the Philippines enjoy a trade relationship, and both have recurring tensions with China.
Beijing views Taiwan as a breakaway province, and has repeatedly threatened invasion. Meanwhile, Philippine boats have clashed with Chinese vessels as the countries spar over the disputed South China Sea.
The pitch by Lachica’s group, the Semiconductor and Electronics Industries in the Philippines Foundation, is part of the country’s attempt to diversify beyond chip testing and packaging, a less advanced part of the manufacturing process that carries thin profit margins.
Lachica added that the country has been been moving up the value chain, and hopes the same for semiconductor wafer fabrication operations.
The Philippine has lost ground to neighbours such as Vietnam in recent years, after a revamp of local incentive programmes led to the flow of advanced manufacturing elsewhere, he noted.
The country’s electronics and semiconductor exports are set to contract by 10 per cent this year because of inventory corrections, before rebounding by 5 per cent next year, he said.
President Ferdinand Marcos Jr has backed a bill seeking to change the incentive regime, to attract more foreign investors. Meanwhile, efforts backed by the US and Japan to build Philippine infrastructure bode well for the industry’s prospects.
“We are handicapped by the aggressiveness of Vietnam, Indonesia and Malaysia,” Lachica said. “We need to come up and essentially tell the world that the Philippines is open for business again.” BLOOMBERG
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