Policy reforms urged for semiconductor industry

The Philippines needs to develop policy reforms for the local semiconductor industry to regain its competitive edge in the global market, a study done by the Economic Research Institute for Asean and East Asia (ERIA) said.

The Philippines cornered a substantial share in the 1990s, capturing 7.5 percent of the global semiconductor market in 1999.

The country, however, lost its strong position to China in the 2000s, with its share plunging to 2.5 percent in 2012.

“There is a need to formulate a comprehensive policy and a long-term development plan to establish the Philippines as a major Asean center for chip design,” said Emily Christi A. Cabegin of the University of the PhilippinesSchool of Labor and Industrial Relations in the discussion paper called “The Challenge of China and the Role of Deepening Asean Integration for the Philippine Semiconductor Industry.”

One reason for the erosion of the Philippine share in the global semiconductor market is the failure to attract more diversified foreign direct investments (FDI), Cabegin said.

The Philippines relied heavily on the US and Japan for semiconductor trade and investments, contrary to what Singapore and Malaysia did in gaining China’s investments.

“The Philippines suffered from the significant downslide in semiconductor trade during the global economic slump that affected the US, Europe, and Japan in 2001 and again in 2008-2009,” the author said.

“China maintained relatively high economic growth at 9 percent to 10 percent annually for 2008 and 2009, and the stronger integration of Singapore and Malaysia in international production network with China had offset the negative impact of the contraction in demand from the West and Japan,” she added.

The Philippines also failed in developing its technological capacity to keep pace with the rapid advance in chip technology, Cabegin said.