The Philippines stands as the world's ninth-largest chip exporter, and the semiconductor sector is the country's largest export industry. However, there are untapped opportunities to boost labour productivity and address infrastructural and regulatory bottlenecks for the semiconductor industry. This report examines opportunities and challenges for the Philippines’ semiconductor ecosystem, particularly in assembly, testing, and packaging, and provides recommendations to unlock its growth. The report combines quantitative and policy analysis of the Philippine semiconductor ecosystem – including infrastructure, human capital, and integration into global value chains. Its recommendations target critical areas: improving the business and operational environment for the Philippine semiconductor industry, boosting investments in R&D and technology, and achieving ambitious workforce development plans through industry-academia partnerships and international collaboration. This report provides strategic guidance to strengthen the Philippines' position in global semiconductor value chains and address current productivity trends. By implementing the policy recommendations, the Philippines can capitalise on emerging opportunities and unlock growth in the semiconductor ecosystem, particularly in assembly, testing and packaging.
Promoting the Growth of the Semiconductor Ecosystem in the Philippines
Abstract
Executive Summary
The semiconductor industry, the backbone of modern digital and electronic technologies, is witnessing significant shifts in its global landscape as economies seek to strengthen their role in this strategically important sector. This report analyses the semiconductor ecosystem in the Philippines and identifies policy recommendations to help its development, with a focus on assembly, testing and packaging.
The report unpacks both quantitative and qualitative evidence. Quantitative analysis focuses on the existing semiconductor and electronics industry in the Philippines, examining its evolution and performance using both aggregate and micro-economic data, and analysing key enabling factors including infrastructure, human capital and integration into global value chains. The report also provides a mapping of the institutional and policy landscape affecting the semiconductor ecosystem of the Philippines, with deep dives into the policies affecting human capital and technology, research and development (R&D) and innovation impacting the domestic semiconductor ecosystem.
The Philippines has a vibrant ecosystem of firms active in the electronics and semiconductors manufacturing industry, which is the country’s single largest export industry. This reflects the Philippines’ role as a key player in assembly, testing and packaging services, ranking ninth globally by exports of chips. Locally owned and operated firms have an established presence in the sector’s core niches in assembly, testing and packaging, and to a lesser extent in integrated circuit design, where they compete against international firms. Nevertheless, the OECD analysis suggests that there is room to improve labour productivity and address infrastructural and regulatory bottlenecks for the Philippine semiconductor industry. The limited role played by young firms and few recent greenfield investments from foreign firms suggest untapped potential in the Philippines.
To unlock this development, this report offers policy recommendations structured in four main areas:
Improve the business environment for Philippine semiconductor firms, including by designing a long-term vision and national strategy for semiconductor industrial development, and facilitating investment by addressing regulatory bottlenecks in chemicals and business permitting. Ensuring a stable policy environment, including with respect to taxation, is essential for unlocking semiconductor investment.
Address the operational requirements for the semiconductor industry in the Philippines. The semiconductor industry relies on sustainable and affordable access to key enablers, like electricity, good quality freight and logistics and infrastructure to transport goods within the Philippines and internationally. This entails encouraging more renewable energy investment, fostering competition in the logistics sector and investment in key infrastructures, including roads and airports.
Support the Philippine semiconductor innovation landscape, including by continuing to facilitate access to key technological infrastructures that support the semiconductor ecosystem in the Philippines; and ensuring any new government-funded facilities are sustainably financed and respond to demand from the ecosystem. Encouraging both public and private R&D investments, including through R&D grants, is also essential.
Focus on demand-driven, evidence-based policies for human capital development in the Philippines, including by ensuring education and training systems are responsive to changing needs, and building mechanisms to institutionalise already extensive and long-standing collaborations between industry and academia. Looking abroad to the Filipino diaspora and international partnerships can also help to meet ambitious goals for the development of the Philippine semiconductor workforce.
