Philippines wants to be a global semiconductor giant by 2030. Can it get there?

The Philippines has unveiled a five-year plan to boost its presence in the global semiconductor and electronics industry, targeting annual exports of chips and electronics worth US$110 billion by 2030. This ambitious goal could potentially drive greater economic growth and job creation in the country. However, achieving this target faces significant challenges, including potential issues with political stability and capacity constraints within the industry.

Ralph Recto, the chief of the Philippine Semiconductor and Electronics Industry Advisory Council (SEIAC), emphasized the need to transition the sector from manufacturing and assembly into higher-end operations, such as chip design, engineering, and research. This shift is crucial for boosting the Philippines' competitiveness in the regional market. One specific target is to increase the country's share of global assembly, testing, and packaging from the current 4% to 7% by 2030.

The plan also aims to expand the country's share of the global electronics manufacturing services market from less than 1% to 4%, and to establish an integrated circuit design sector that generates between US$2 billion and US$3 billion in annual exports. These goals are expected to create opportunities beyond the manufacturing sector, including jobs in engineering, research, and design.

The Philippine semiconductor and electronics industry currently accounts for over 60% of the country's merchandise exports, generating more than US$45 billion annually. The industry is also considered a key driver of the Luzon Economic Corridor, a US-Japan-Philippines infrastructure initiative and economic hub.

To overcome potential barriers, the SEIAC has identified the need to address skilled worker shortages, gaps in infrastructure, slow permitting processes, and regulatory bottlenecks. The government plans to establish technical working groups with specific targets and timelines to ensure progress in these areas.

Josef Yap, a senior research fellow at the Ateneo School of Government, noted that the road map provides a more explicit industrial upgrading strategy compared to previous recommendations. It connects semiconductor policy to related sectors such as AI, data centers, consumer electronics, clean energy, infrastructure corridors, economic zones, and international partnerships. This broader approach is seen as more ambitious and transformative for the economy.

However, experts warn that the target of US$110 billion in exports is highly ambitious. To reach this figure, the Philippines would need to achieve an annual compound growth rate of over 17% over the next five years. The most credible target is increasing the country's share of global assembly, testing, and packaging, as it has a more established base. Nevertheless, the Philippines faces stiff competition from neighboring countries such as Malaysia, Vietnam, Thailand, and India.

According to Lawrence Dacuycuy, a professor of economics at De La Salle University, achieving the 7% share target in ATP would require the Philippines to outperform global growth projections, particularly from competing nations like Vietnam and Malaysia. Strengthening the country's supply chains and creating an investment architecture that supports upgrades, advanced manufacturing, diversification, and financing will be crucial.

The road map is considered the Philippines' most ambitious and sophisticated industrial plan yet, with a strong focus on building infrastructure, such as national laboratories for design, advanced packaging, and lab-scale fabrication. This shift in focus toward building capabilities represents an important change in how industrial policy is approached in the country.