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SEIPI predicts strong growth for Philippines electronics

Posted: 20 Jan 2010 ?? ?Print Version ?Bookmark and Share

Keywords:SEIPI? recession? Philippines electronics? exports?

Ernie B. Santiago

Santiago: The electronics industry is set up for strong growth continuing into 2010 and 2011.

The Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) celebrated its 25th anniversary last October as the industry was just beginning to see signs of a coming recovery. The president of the organization, Ernesto B. Santiago, told EE Times Asia what the country's electronics industry can expect in 2010.

EE Times Asia: Can you estimate the performance of the Philippines' electronics industry for 2009?
Santiago: Exports numbers have been slowly picking up since January 2009. The drivers of growth include:

???Buyers are restocking depleted inventories
???Industry responding to improving market conditions and stronger-than-expected demand
???Increased in global sales of netbooks, e-books, smart phones, LED panel displays, blue ray DVDs, and soundbars are fueling increased orders

Strong industry export performance in Q3 09better than Q2 09 and expect a double digit growth. However, it will not measure up to the exports performance in the same quarter as last year. But exports in Q4 2009 will be higher than Q4 08. Given this, we expect a 10-15-percent decline in exports in 2009. SEIPI is optimistic export sales will be better in 2010 as demand is expected to pick up considerably late in the year.

How has the recession affected the Philippines electronics industry?
The recent global financial downturn was the toughest challenge faced by the Philippine electronics industry in its entire history. To manage the downturn and not put companies on the red, some measures implemented by the industry were compressed workweek, outsourcing of non-core functions, temporary lay-offs, retrenchment, elimination or reduction of overtime and freeze on hiring. Good news today is that the industry is back in hiring mode. No consolidation deals and acquisitions were reported during the first six months of 2009 although some partnerships and alliances were formed.

What are the major challenges facing the Philippines electronics industry in 2010?
The economy is clearly improving. It has stabilized after the start of a recovery in June 2009. The world economy is expected to return to normal growth rates in 2010, after the worst worldwide GDP performance since 1946.

Rising current spending and demand are moves in the right direction. Due to a stabilizing economic environment in the Q2 and improving supply chain visibility, electronics shipments rebounded as inventories were replenished and modest forwardlooking purchases were made. Sales of consumer products, such as netbook PCs and cellphones, are supporting the modest recovery in demand that is now under way. Capacity utilization rates are strengthening due to the tremendous capital spending cutbacks in 2008 and 2009. The electronics industry is set up for strong growth continuing into 2010 and 2011.

Global recessions are times of pent up demand; they do not crush or eliminate demand for electronic systems. As soon as things look better, companies and people start buying new PCs, cellphones, new servers, TVs and other appliances. We have to be prepared to take advantage of the first signs of an uptick.

The industry is still generally well-positioned to maintain stabilization in 2010 thanks to already healthy balance sheets, continued designated resources to R&D and conservative operations. The Philippine electronics industry is currently feeling the positive effects of improved consumer demand in the end market, and is showing signs of recovery. The local electronics industry is expected to resume growth and follow global electronics market patterns.

What in your opinion are the possible solutions to those challenges? How is SEIPI planning to assist in realizing these solutions?
The need to further the growth and sustain the competency of our people (the major source of the industry's competitiveness) is the major challenge. SEIPI intends to redirect the Advanced Research and Competency Development Institute (ARCDI) and focus its program on Development (rather than research) to enhance the installed capabilities and competencies of our engineers and member-companies. In pursuit of excellence, SEIPI adopted a "Change Adaptive" philosophy in the past 25 years. In the next coming years, our organization intends to be a "Catalyst of Change."

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