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Philippines set for sunshine economy in '04

Posted: 11 Nov 2003 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor and electronics industries in the philippines? seipi? electronics industry? semiconductor?

The electronics industry in the Philippines is poised for a "sunshine economy" in 2004, with growth projected at 14 percent to 25 percent. This was the general outlook of the panelists and participants in the recently held 5th Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) CEO Forum.

Themed "Capturing the upturn: Right here, right now," the forum compared the weak first half of 2003 in terms of unit shipments and revenues, but promised a stronger second half, predicting a 9 percent to 12 percent growth by the end of this year. The group also posed a challenge for semiconductor companies to do better to be competitive with China.

Indeed, the picture is looking better. In his speech, Norberto Viera, president and managing director of Texas Instruments Inc. (Philippines) and SEIPI president, said that the Philippine electronics industry recovery is in tangent with the worldwide market and revenue growth, and that the Philippines should be expecting a strong finish to 2003, and a brighter 2004.

China not a threat

China now enjoys the fastest growth in terms of semiconductor supply and demand. Gartner Dataquest cites a 28.4 percent CAGR for 2003, up from 23 percent for 2002. And this figure is projected to reach 36.8 by 2004.

Panelists agreed that with the outbreak of SARS, nations proved that reliance on one country alone, like China, can also be dangerous. This is where other Asian countries like India, Malaysia, Thailand, and the Philippines enter the picture.

Arthur Young, chairman and CEO of PSi Technologies Inc., believes that compared to China, the Philippines holds more potential, and all the industry needs to do is to realize it. "In China, the industry and industry policies are controlled by government. The government can change one policy overnight, and that is where the risk is. We don't see this in the Philippines. In this country, there's democracy. Companies are more in control."

"Our biggest challenge for now is to reverse the trend of declining capital, and go in the right direction," said Young. "To grow, we need investments."

We need the Philippine government to be more proactive on dealing with issues like infrastructure, subsidies and higher education, said Art Tan, president and CEO of Integrated Microelectronics Inc. "China is not a total solution for everybody, it is only a temporary haven for the industry."

Tan believes that the Philippines should be getting a market share from the migration of semiconductor companies in the West to China, Taiwan and Korea. "Currently, there's a continuous magnet in Asia, and the Philippines should be taking advantage of this. IMI is poised to grow 25 percent next year," Tan said.

Dan Lachica, president of First Sumiden Circuits, agrees by saying that "when the industry turns around, we want to be in a position where we can leverage our business."

Doing local business

SEIPI members have also expressed their concerns on the rising costs of doing business in the country. Members have complained about the surge in power costs due primarily to purchase power adjustment. The group is urging the government to address this issue.

Don Mika, president of Cypress Manufacturing Ltd, expressed his company's interest to build the first-ever wafer fab in the Philippines. But "power rates are not that competitive," he said.

Simon Parker, managing director of Citigroup Global Markets Asia, challenged the Philippine government to "expand physical infrastructure, attract foreign technology investments and facilitate trade with China." He also sees the need to "continue education and development for engineering and R&D professionals."

Despite the issues on rising costs, infrastructure, government policy, security and Philippine politics, Steven Leece, managing director of Moog Controls Corp. sees no reason why companies should be wary of investing in the Philippines. "Our company likes being here. We're competitive. We consistently grow. We never had retrenchment. And our growth is always on a smooth curve. I see no reason why we will be compelled to leave the country."

SEIPI is a 19-year old industry organization with 204 members, 125 of which are foreign companies. Electronics is acknowledged as the main driver of the Philippine economy as it accounts for 70 percent of the country's total exports.

- Jerico Abila

Electronic Engineering Times - Asia

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