The Philippine semiconductor industry, paired with the electronics industry for data reporting purposes, is the largest contributor to the manufacturing sector within the country. The Philippines is also one of the fastest growing economies in its region and has close proximity to a number of large export markets.
That combination has created strong growth and revenue possibilities for the semiconductor industry. The environment for the industry, however, is often described as being “very challenging.” Some months offer high levels of growth for the industry and adds strength to the industrial centers. Then there are months like December 2015, when exports from the industry dropped by over 26%.
There are a number of outside factors that influence this industry as well. Taiwan and China have a much larger share of the semiconductor market. Slow global demands from major markets can impact revenues almost immediately.
Interesting Philippine Semiconductor Industry Statistics
#1. In 2013, the Philippine semiconductor industry was responsible for 41% of total exports. That level of production brought in $918 million of domestic and foreign investments. (Philippines Department of Trade and Industry)
#2. More than 2.2 million people are employed because of the semiconductor and electronics industry in the Philippines. Most employment opportunities are located in Manila, Baguio, Clark, Cebu, and Calbarzon. (Philippines Department of Trade and Industry)
#3. There are currently more than 400 firms operating within the semiconductor industry in the Philippines. About 73% of those firms provide semiconductor services. The remainder provide EMS capabilities. (Philippines Department of Trade and Industry)
#4. Total exports for the semiconductor industry in the Philippines are expected to rise by 5-6% in the next 12 months as higher levels of demand for data-connected equipment are expected. (Reuters)
#5. Electronics compose about 52% of the total industry, which includes semiconductors. About 12% of total exports from this category are exported to the United States. (Reuters)
#6. The Philippine central bank expected 2017 total exports to contract by 3% for the Philippines, though they did forecast a 2% expansion for 2018. (Reuters)
#7. About 19% of the electronics exports from the Philippines are shipped to Hong Kong. Japan and China both have 13% of this export market. Singapre comes in just behind the United States, at 11%. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#8. About 500,000 students graduate annually with degrees that make them instantly competitive in the semiconductor industry. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#9. The Philippine semiconductor industry creates 7 indirect jobs for every 1 direct job that it provides. In 2012, about 2 million direct jobs were provided, which meant support for about 14 million people. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#10. If the semiconductor and electronics industry were to immediately cease to produce output, the GDP of the Philippines would be estimated to drop by 28%. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#11. For every P1 billion in investments that are received by the industry, up to 1,408 high-quality jobs can be added to the local economy. This level of investment also creats up to $0.25 in additional household income within the local economy. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#12. From 2010-2012, $1 billion in investments was able to create over $10 billion in exports. (Semiconductor and Electronics Industries in the Philippines, Inc.)
#13. About $690 million was transferred in total direct tax contributions by the Philippine semiconductor industry in 2012. (Philippines Department of Trade and Industry)
#14. About half of the world’s demand for 2.5-inch HDDs are fulfilled by the Philippines semiconductor and electronics industry. The country also supplies about 10% of the demand for 3.5-inch HDDs. (Philippines Department of Trade and Industry)
#15. Semiconductors are the primary component of all Philippine exports. In 2010, they accounted for $23.8 billion, an increase of over $7 billion from the year before. Electronic data processing exports come in second, but were just 20% of the value of semiconductors. (Philippines Department of Trade and Industry)
#16. Revenues within the consumer electronics segment of this industry are forecast to total $405 million in 2015. Total revenues are expected to show a CAGR of 11.4% annually through 2022, resulting in a total market volume of over $620 million. (Statista)
#17. The average revenue per user within the Philippines semiconductor industry is just under $45. The World Bank classifies the Philippines as a lower-middle income country, with a per capita GDP of $2,904 in 2015. (Statista)
#18. Under its current structure, the Philippines electronics industry accounts for about 10% of the global supply of semiconductor manufacturing services. Texas Instruments produces 100% of their DSPs in the country. (Philippines Department of Trade and Industry)
#19. Every month, the industry is able to produce 200,000 laptops, 700,000 ODDs, and 900,000 LCDs. (Philippines Department of Trade and Industry)
#20. 48% of the employment opportunities which are available domestically in this industry are located in Calabarzon. Metro Manila accounts for another 42% of the industry employment. (Philippines Department of Trade and Industry)
#21. 28% of new entrants into the electronics industry state that they prefer the Philippines as their destination of choice. Only Japan held a higher preference, at 30%. (Philippines Department of Trade and Industry)
#22. The industry in the Philippines is not high-value added for the most part, producing just $8 billion in gross value added in 2014. That was about 2.8% of GDP and likely due to the fact that the industry tends to manufacture intermediate components. (Oxford Business Group)
#23. When global semiconductor sales grew by about 10% in 2014, the Philippines semiconductor industry was able to achieve a growth rate of 7.4%. Since 2007, the cluster growth in the industry has had an export CAGR of -2%, while the global rate in the same measurement was 4%. (Oxford Business Group)
Philippine Semiconductor Industry Trends and Analysis
The potential for the Philippine semiconductor industry remains quite high. Investors are shifting the industry toward value-added manufacturing practices so that global demands can continue to be met. At the same time, company leaders within the industry are pushing to expand research and development opportunities to remain competitive with global leaders like Taiwan and China.
There are some unforeseen political risks which may shape the Philippine semiconductor industry in the short-term. In 2016, President Rodrigo Duterte stated that there was an intention to cut ties with the United States. He told the U.S. market that it was not needed, and any American companies should be prepared to leave the country, even if they supported the semiconductor market.
One thing is for certain: the need for semiconductors is not going away any time soon. If the Philippine industry can position itself to become a leading exporter in this segment, the value of the industry looks to be quite bright indeed.