This chapter presents the overall assessment and recommendations of the OECD semiconductor ecosystem study of the Philippines. It highlights the Philippines’ key strengths in the global semiconductor landscape and identifies areas of potential improvement, focusing on the business and operational environment; the technology and innovation ecosystem; and human capital.
Promoting the Growth of the Semiconductor Ecosystem in the Philippines
1. Assessment and recommendations
Copy link to 1. Assessment and recommendationsAbstract
Policy recommendations
Copy link to Policy recommendationsBusiness and operational environment
Design a single long-term vision and national strategy for developing the Philippine semiconductor ecosystem, with clearly defined policies, funding and goals.
Reduce the time required for key administrative processes, including obtaining business permits and chemical licenses.
Increase the ease of doing business, including reducing red tape and regulatory burden, also with respect to tax administration — value added tax (VAT) exemptions and refunds.
Address burdensome administrative requirements for the semiconductor industry by easing data sharing and collaboration across government.
Invest in renewable energy capacities through policy initiatives that have emerged as international best practices.
Continue to invest in key infrastructures to address logistical bottlenecks for the semiconductor ecosystem, including at Ninoy Aquino International Airport in Manila.
Encourage greater competition and address regulatory barriers to reduce the cost of freight and logistic services.
Technology, research and development (R&D), innovation and business support
Prioritise public R&D funding from the government, higher education institutions and firms, particularly by expanding the use of R&D grants.
Protect and possibly expand effective programmes that enable semiconductor firms, such as the national testing facility ADMATEL, to access technology.
Assess the presence of a sustainable business model, including demand and key skills, prior to the development of a local laboratory-scale wafer fabrication facility.
Human capital
Map the relevant skills required for the Philippine semiconductor industry and their forecasted demand.
Provide a concrete work plan and timeline to reach the goal of 128 thousand semiconductor engineers and technicians by 2028.
Review the governance of institutions involved in skills development for the semiconductor industry to ensure that skills programmes are sufficiently responsive to industry needs.
Develop mechanisms to encourage more partnerships between universities and semiconductor companies and use lessons from these partnerships to update curricula and develop more demand-driven systems.
Utilise international partnerships to help train instructors and professors of semiconductor-related programmes and technologies.
Deploy further efforts to incentivise the repatriation of the Filipino diaspora with semiconductor-related skills, including through the expansion of programmes like the Balik Scientist Program.
The Philippines has a vibrant ecosystem of firms active in the electronics and semiconductor manufacturing industry. Electronics and electrical products are the single largest Philippine export industry, accounting for almost 60% of total Philippine merchandise exports. Most of these exports are finished semiconductor products that are subsequently incorporated into electronic devices, reflecting the Philippines’ role as a key player in assembly, testing and packaging services. Locally owned and operated firms have an established presence in the sector’s core niches and to a lesser extent in integrated circuit design, where they compete against international firms. However, the OECD economic analysis (see Chapter 2) indicates room for improved labour productivity and reduced costs within the Philippine semiconductor industry; relatively few young firms and limited recent greenfield investments from foreign firms suggest untapped potential.
This chapter provides tailored policy recommendations to help the Philippines build on its existing strengths in assembly, testing and packaging and unleash growth in the local semiconductor ecosystem. Governments must carefully assess all spending decisions in a constrained fiscal environment to retain budget neutrality and identify crucial investment areas that support the development of the semiconductor ecosystem. The following sections provide recommendations on prioritising expenditures in key areas for such development in the Philippines.
The business and operational environment for Philippine semiconductor firms
Copy link to The business and operational environment for Philippine semiconductor firmsThe Philippines has a vibrant and diverse semiconductor industry, a young English-speaking workforce and strong links between the industry and academia. With these advantages, the Philippines should be well positioned to benefit from investments in the semiconductor industry deployed in the near future. Nevertheless, several business and operational environment improvements are necessary for the Philippines to fully seize current opportunities. These policy recommendations address the business and operational environment, with a particular focus on changes that can be implemented swiftly. They could reduce costs and increase performance for firms in the industry.
Design a coherent long-term vision and national strategy for developing the Philippine semiconductor ecosystem
The Philippines boasts key advantages for investments in the semiconductor industry and a number of existing, successful programmes and policies are in place to support local firms. Moreover, the Philippines government and leading policy makers have publicly announced their commitment to encouraging the development of the local semiconductor ecosystem.
To better communicate these plans, ambitions and policies, the Philippines could establish and publish a single medium- to long-term strategy for the industry, co-developed by all relevant public agencies and stakeholders (industry, research community, civil society and trade unions). This approach would provide a single reference point to understand the landscape of policies and incentives relevant to the ecosystem. Furthermore, developing a strategy would help all parts of government streamline their policy‑making efforts. Clear benchmarks and policy plans would communicate the Philippines’ vision for the semiconductor industry and further demonstrate a long-term commitment to policy and programme continuity.
The Philippines has already progressed towards developing a coherent long-term vision and national strategy for the semiconductor ecosystem. First, several relevant policy documents already exist, including a technology-focused roadmap from the Department of Science and Technology (DOST) (DOST, 2023[1]) and a previous electronics industry development plan from the Board of Investments (BOI) (BOI, 2013[2]). These and other documents could serve as a foundation for a single, coherent semiconductor strategy.
The Philippines is already home to a high degree of collaboration among government and non‑governmental stakeholders in the ecosystem, which could help ensure a collaborative and well-developed strategy that meets the needs of all stakeholders. For example, an existing electronics sectoral working group composed of representatives from relevant government agencies and the industry could be expanded to encompass other non-governmental stakeholders, to include different perspectives from the technical and research community, civil society and trade union representatives.
Such a strategy could also help address several interrelated challenges noted by stakeholders. The first relates to a lack of awareness or clarity about government policy initiatives available to the semiconductor industry. For example, understanding the utility of key technology initiatives could foster a virtuous cycle of technological development. A second issue relates to inter-agency co‑ordination of these initiatives: stakeholders note that similar initiatives are led by different government branches, suggesting streamlining opportunities. For example, regional innovation hubs and regional inclusive innovation centres in the Philippines are administered by two different departments.
The third challenge relates to the continuity of policies and programmes. Some stakeholders benefitting from highly successful government programmes that encourage and support technological adoption note a lack of confidence in their long-term funding. Some firms have noticed that recent taxation reforms have affected investment incentives and confidence in the stability of the wider investment environment. Finally, although the government has made publicly announced goals for the semiconductor industry, it could establish a more concrete roadmap to achieve these aims (see section below on human capital development and Chapter 3).
To best address these challenges, a public, government-led strategy would have clear advantages over internal, unpublicised roadmaps or industry-led strategies. A government-led and authored strategy disseminated publicly would demonstrate a political commitment to the semiconductor industry in the Philippines and abroad. While the government has funded private sector-led strategies, like the Product and Technology Holistic Strategy (PATHS) roadmap, such a strategy is likely to risk incoherence with other strategic public goals. Moreover, a government-led strategy developed in conjunction with relevant non-governmental stakeholders has positive collaborative spillovers for the broader ecosystem.
Such a strategy should highlight the key goals for developing the semiconductor industry in the Philippines. Given the existing landscape of Philippine assembly, testing and packaging firms, one such goal could include encouraging these firms to move up the value chain by enhancing the technology intensity and value added to their operations through increased investments in innovation and human capital. The strategy should also include clear commitments to medium- to long-term government programmes in the semiconductor ecosystem. For example, long-term continuity or expansion of funding for key initiatives (like the Advanced Device and Materials Testing Laboratory, ADMATEL) or an expansion of grants available to innovating firms could signal a strong commitment to the development of the Philippine ecosystem (see section below on technology and Chapter 3). Similarly, a key focus could include concrete plans to meet human capital requirements in the semiconductor industry (see section below on human capital development).
Facilitate investment by continuing to address regulatory bottlenecks for the semiconductor industry
The importance of coherent, fair, clear and predictable regulation for investment is well recognised by the Philippine government, which has a long-standing focus on improving the business climate. Successive development plans have identified regulatory streamlining as a key priority to encourage international investment. Some of these efforts have been very successful: for example, the Philippine Economic Zone Authority (PEZA) has a strong reputation for its investment facilitation and promotion services. The passage of the Ease of Doing Business and Efficient Government Service Delivery Act in 2018, with its focus on regulatory streamlining, has helped simplify procedures, reduce red tape and expedite transactions. New efforts in regulatory impact assessment under the Anti-Red Tape Act and through the Anti-Red Tape Authority (ARTA) are also positive signals to prospective international investors.
Still, some concerns about the regulatory climate remain, affecting investor confidence. For instance, firms highlight delays in receiving necessary permits — e.g. business permits administered by local government units. For issuing business permits, the government has partnered with local government units to help standardise and digitalise the process (ARTA, 2024[3]), while ARTA has provided guidelines to local government units (2021[4]). Still, stakeholders note continued concerns about the process of receiving these permits. Bottlenecks at the local level can spread because business permits typically act as prerequisites for other licenses from other public agencies, such as the Bureau of Customs (BSP, 2023[5]).
Similarly, lengthy processes linked to necessary inputs can represent bottlenecks for just-in-time semiconductor manufacturing processes. For example, the regulatory process for acquiring controlled chemicals used in semiconductor manufacturing, which also have applications in other regulated or controlled activities, has been reported as slow, with issues stemming from unclear regulatory requirements and poor or insufficient co‑ordination. The Philippine government is aware of the issues in chemical permit delivery and making progress through regulatory impact assessment, close stakeholder engagement and the implementation of the Philippine Chemical Industry Roadmap, though challenges persist.
Finally, duplicative regulations and reforms can raise costs for the semiconductor industry. For example, the implementation of the Electronic Tracking of Containerized Cargo (E-TRACC) system by the Bureau of Customs duplicated existing systems in economic zones, increasing administrative burden and highlighting co‑ordination issues within the Philippine government.
Beyond existing efforts, administrative simplification represents an important means of improving the regulatory environment and of helping the semiconductor industry and the broader business environment. Success stories from PEZA or local government units in addressing administrative challenges should be disseminated and implemented further. Greater resources for burdened public agencies to reduce administrative delays could also have a tangible impact on the local industry. Government agencies should be incentivised to co‑ordinate, ensure consistent, streamlined regulatory application and minimise burdens on relevant firms. Better digitalisation of government processes and data-sharing agreements, such as those already in place between the Bureau of Customs and PEZA, could be expanded or adapted to address co‑ordination issues across government agencies.
Finally, the developing one-stop-shop system under the Green Lanes mechanism, established by Executive Order No. 18 in 2023, could also provide lessons for the regulatory streamlining of priority projects in the semiconductor industry. Green Lanes has supported billions of pesos of investment in renewable energy in the Philippines; although the electronics industry is a key target for the initiative, no semiconductor investments have made use of this initiative to date. A key factor of the programme’s success to date appears to relate to BOI officers’ dedicated time and expertise in identifying and addressing bottlenecks across several levels of government. The government could consider proactively extending dedicated support to the semiconductor industry to help address regulatory bottlenecks through the Green Lanes or other investment promotion programmes.
Continue efforts to address taxation issues experienced by firms
In 2023, the CREATE Act was enacted to make the Philippines competitive in the region by lowering corporate income tax rates and rationalising fiscal incentives, including VAT exemptions, granted to registered business enterprises. However, the administration of zero-VAT rating for suppliers as part of the CREATE Act reforms has been noted as lengthy, with delays in the VAT exemption application process for suppliers of registered export enterprises and in receiving the relevant refunds.
In collaboration with the Department of Finance, the BOI continues to work towards a simpler and more efficient VAT regime through the CREATE MORE Bill, which is currently under consideration in the Philippine parliament. Aside from proposing amendments for a simplified tax refund system for registered business enterprises and implementing a risk-based classification of claims and audit framework in collaboration with the Commission on Audit, the bill also clarifies the VAT regime for registered business enterprises and effectively seeks to restore the VAT zero-rating of suppliers of registered export enterprises. Fully addressing these issues would build investor confidence and increase competitiveness for electronics and semiconductor exporters in the Philippines.
Learn lessons from abroad when incentivising investments in renewable energy
Sustainable and reliable electricity at competitive prices is necessary to operate semiconductor manufacturing facilities, including in the assembly, testing and packaging stage of the value chain. However, the provision of this utility service in the Philippines remains challenging. Firms report that energy costs in the Philippines are among the highest in Southeast Asia and electricity outages are common (Francisco, 2022[6]).
Stakeholders highlight that the forecasted demand for energy exceeds the available supply, particularly as the Philippines transitions to renewable energy sources under the Philippine Energy Plan, which seeks to increase the share of renewable energy in power generation to 50% by 2040. In addition to contributing to the Philippines’ own climate goals, renewable energy is increasingly a consideration for semiconductor companies as part of their global environmental, social and governance goals. Enhancing efforts towards renewable energy while reducing the cost of electricity would increase the Philippines’ attractiveness as a destination for semiconductor investment.
While the causes of high prices in the Philippines are multi-faceted, public commitment to diversifying energy sources and modernising energy infrastructure in the Philippine Development Plan are encouraging. Similarly, extending fiscal incentives to firms that invest in energy efficiency projects under the Renewable Energy Act of 2009 and the CREATE Act is also an important step in the right direction, as are concurrent efforts enabling foreign investment in the sector. The BOI issued Memorandum Circular 2023-006 to allow tax incentives and duty exemption on imports of capital equipment, raw materials, spare parts or accessories for self-financed energy efficiency projects. This policy is the government’s response to electronics companies’ need to green their supply chains in order to remain competitive in the export market.
However, the Philippines could learn from lessons abroad when considering instruments designed to encourage investment in renewable energy. For example, production grants are a common mechanism to support the renewable energy ecosystem. Contracts for difference, a long-term agreement where the government or a public entity guarantees a fixed price (strike price) for electricity generated from renewable energy sources, can help to stabilise prices and producer revenues (see also Box 3.3). Both kinds of policies can reduce the cost of capital and incentivise investment in energy production assets with high fixed (and often sunk) costs. A mix of such incentives could help encourage firms to invest in renewable energy, boost energy supply and address high power costs.
Improve competition in the freight and logistics sector
Freight and logistics services are required to receive the inputs necessary for semiconductor firms to operate within globally or regionally integrated production networks, facilitate reliable, just-in-time delivery of inputs and ship finished products to the end user. However, the domestic semiconductor industry considers the cost of freight and logistics services in the Philippines to be high compared to other economies in the region. Analysis in Chapter 2 highlights that transportation could be improved to strengthen the performance of the electronic component manufacturing industry in the Philippines. More generally, better logistics are key to increasing a country’s economic development by facilitating international trade and improving competitiveness.
As an archipelagic country, maritime freight is particularly important for the Philippines. Maritime freight is used for imports of key semiconductor inputs, including those stable and less sensitive to light and heat. The OECD has identified key barriers to competition in the sector, which affect its competitiveness (OECD, 2021[7]). Chief amongst these is a perceived or real conflict of interest for relevant regulatory authorities, and barriers to foreign investment stemming from the legislative designation of seaports as a public utility. A complex regulatory structure involving overlapping agencies, governing authorities, licenses and regulatory permits can further limit competition (PCC, 2021[8]).
Encouraging greater competition in freight and logistics could help encourage carriers to serve other airports and seaports in the Philippines, including those closer to semiconductor firms outside metropolitan Manila. The Philippines should, therefore, seek to foster competition in the sector, notably by encouraging regulatory independence and separating the functions of relevant authorities (OECD, 2021[7]).
Continue to invest in infrastructure to encourage better movement of goods within the Philippines and internationally
Similarly, transport infrastructure in the Philippines is noted as a challenge for the semiconductor and other exporting industries. While air transport represents a small share of overall freight, most semiconductors and other electronic products are shipped by air to allow for just-in-time production processes in globally integrated production networks. In the case of the Philippines, almost all semiconductor products are exported through Ninoy Aquino International Airport in Metro Manila. Road infrastructure, which is required for the internal transport of inputs in the Philippines, is less developed than other Southeast Asian neighbours.
The Philippine government is increasing investment in infrastructure, with several projects and initiatives now being implemented to address concerns related to the movement of goods within and outside the Philippines. The Department of Transportation is working on fully utilising Clark International Airport, approximately two hours north of Metro Manila and located near some semiconductor firms. Through the Build Better More infrastructure programme, the government is also building the New Manila International Airport in Bulacan and developing key road infrastructure projects to improve the access between industry and key ports.
More investments in these key infrastructures could help diversify options, reduce costs and alleviate potential bottlenecks in the local semiconductor industry. Investing in Ninoy Aquino International Airport and diversifying the options for airborne freight could help reduce this potential bottleneck for the semiconductor and other industries that rely on air freight.
Technology, R&D, innovation and business support
Copy link to Technology, R&D, innovation and business supportThe analysis of the Philippine electronic component manufacturing industry in Chapter 2 highlights important improvements that could be made to enhance firms’ productivity and overall performance. This section provides recommendations on prioritising expenditures on technology and innovation policies to further the goals related to the semiconductor ecosystem.
Focus on increasing government and business expenditure on R&D
The Philippines faces a significant challenge in its low gross expenditure on R&D as a percentage of gross domestic product, which stems from inadequate government and business investment. Additionally, Chapter 2 highlights the need to boost productivity in the electronic component manufacturing industry, as well as address the low share of researchers per capita, where the Philippines trails its counterparts in Southeast Asia by a wide margin. Prioritising investment in R&D is crucial, as it enhances absorptive capacity, fosters innovation and drives the development of new technologies and the refinement of existing products and processes. These advancements can lead to wider economic benefits, such as increased productivity and improved living standards. Moreover, increased R&D investment could strengthen absorptive capacity and help develop a more efficient local supply chain that meets the requirements of back-end manufacturing exporters.
To further catalyse the semiconductor ecosystem and increase its productivity and innovative capacity, the Philippines should increase its investments in R&D and innovation by both the public and private sectors. For public R&D, a key focus could include greater funding in areas supporting the ecosystem, including material sciences and electronic engineering. Strong commitments to continued support for pivotal programmes, like ADMATEL and the Centre for Integrated Circuit Design and Device Research (CIDR), are key for the sector. This would also demonstrate a public commitment to developing the semiconductor industry (see the section on semiconductor firms’ business and operational environment).
Among the most efficient means to encourage firms to invest in R&D, targeted R&D grants can complement existing efforts in the CREATE Act to offer R&D tax incentives. Through the DOST Philippine Council for Industry, Energy and Emerging Technology Research and Development, the Philippine government provides R&D grants to research projects led by government research and academic institutions and the private sector in key priority areas. While electronics is a priority industry, few ongoing or completed projects have been related to the semiconductor industry or core semiconductor technologies, suggesting potential scope for improvement (DOST-PCIEERD, 2022[9]).
Effective efforts to facilitate access to technology for semiconductor firms are laudable and should continue
Publicly funded shared innovation and technology facilities can enable access to technology for the local semiconductor ecosystem. Typically, well-designed programmes target specific needs, reduce prohibitive fixed costs that otherwise stifle innovation or production, and encourage positive spillovers between industry and the technical community.
The Philippines already boasts several successful programmes that meet these criteria and support the competitiveness of the local semiconductor industry. The government-funded national testing facility ADMATEL is chief amongst these, enabling access to advanced failure analysis and laboratory testing capabilities. This facility provides the local ecosystem access to state-of-the-art services, helping local assembly, testing and packaging firms provide competitive services. In addition, ADMATEL also facilitates increased research on additive and material sciences, which could help firms increase the technology intensity of their production and, therefore, move up the value chain. ADMATEL and other similarly effective programmes should be protected and potentially expanded, including closer to hubs for assembly, testing and packaging in Calabarzon and Luzon.
The Philippines should ensure that all expenditures on publicly funded infrastructure are targeted, sustainable and undergo an impact assessment before and during implementation. Typically, proposals for publicly funded infrastructure are administered by DOST, where the technical and financial viability of the project is assessed. Following this process, a governing council composed of several government agencies and private sector representatives assesses the proposal before it is finally approved by the DOST executive committee led by the DOST secretary.
In contrast to ADMATEL, efforts to develop a local laboratory-scale wafer fabrication facility to encourage faster testing of semiconductor designs could be premature. Before committing to the considerable expense of such a facility, the government should first identify a sustainable business model. This includes investigating whether sufficient demand from industry or academic stakeholders exists and whether other core foundational requirements for the facility, like adequately trained workers or relevant infrastructure, are met. In the case of this facility, beyond the extensive DOST-led process outlined above, additional consultation may be warranted to identify whether other options or facilities, such as support for multi‑project wafer services, could adequately address the needs of local stakeholders. The Philippine government has initiated a feasibility study on establishing the wafer fabrication facility to be completed in the coming months.
Human capital development for Philippine semiconductor firms
Copy link to Human capital development for Philippine semiconductor firmsSkills and workforce development are key factors in attracting semiconductor investments and encouraging the long-term sustainability and performance of the existing ecosystem. The analysis of the Philippine electronic component manufacturing industry in Chapter 2 highlights important scope to improve labour productivity in the semiconductor ecosystem in the Philippines, and challenges associated with shortages and retention of key skills. The following section provides recommendations for building skills in the Philippines.
Skills policies, policy making, and governance should remain demand-driven and evidence-based
Human capital is a key input for Philippine semiconductor firms and workforce development remains a major policy priority for semiconductor ecosystem development worldwide. Employers cite a shortage of skilled engineers to meet the needs of the established assembly, testing and packaging sector and the developing integrated circuit design industry in the Philippines. Chapter 2 of this report also underscores that vacancies for highly skilled workers are hard to fill in the Philippine electronic components industry.
In response, the BOI recently announced a target of training 128 thousand additional engineers and technicians by 2028, although a timeline or work plan to achieve this goal has not yet been made public. The Philippine government should also announce the specific actions to be undertaken to reach this goal to demonstrate a tangible commitment to the semiconductor industry (see section on firms’ business and operational environment). The Philippine government, through the BOI, is drafting a plan to realise this goal, which would include efforts to target electronics industry jobs at students. This plan and relevant policies should be included in a holistic and public strategy for the Philippine government’s vision for the semiconductor ecosystem (see section on firms’ business and operational environment).
This public statement of intent in building the workforce for the Philippine semiconductor ecosystem is encouraging for international investors and the local industry. However, this goal must reflect the projected demand for engineers in the sector. Assessing this demand requires strengthening labour market information systems. Mapping the skills required by the national semiconductor industry would help provide more details about public commitment: this effort could contribute to the Department of Trade and Industry’s Philippine Skills Framework, which currently does not feature the industry (see section above on firms’ business and operational environment). Similarly, technical and vocational education and training (TVET) is a key means of training graduates and encouraging labour force mobility; however, the existing national TVET plans do not prioritise the semiconductor industry.
Beyond the number of graduates, it is paramount that curricula meet the needs of industry. Chapter 2 highlights that firms in the electronic components industry carry out extensive on-the-job training, much more than the rest of the manufacturing sector and for even the most junior of staff. This indicates that current graduates are not fully meeting the skills required by the industry. The governance of higher education should be reviewed to ensure that curricula design is responsive to technological development and skills needs in the semiconductor industry. The Commission on Higher Education (CHED), as the sole organisation responsible for the formulation of policies, standards and guidelines in all higher education institutions, holds a particular responsibility in ensuring that science, technology, engineering and mathematics curricula, and in particular engineering, remain consistent with international best practice and the needs of the local industry. Moreover, care should be taken to ensure that the primary and secondary education systems can adequately equip learners with the foundational skills required to thrive in future technical careers. Greater horizontal co‑ordination (e.g. with other government agencies like the Technical Education and Skills Development Authority, TESDA, and the Department of Education) and vertical co-operation (including with trade unions and civil society groups) can help ensure that skills frameworks remain responsive.
In the context of human resource development, a new programme from the Philippine government on “Academe-Industry Matching” aims to improve the alignment between academic education and industry needs, targeting basic education, higher education and technical and vocational education. In this context, the BOI is understood to have signed memoranda of understanding with CHED and with the Department of Education which would explore options for increasing the responsiveness of educational pathways to skills demand, including updating curricula, developing courses and training instructors. Similarly, the BOI is collaborating with TESDA to consider the industry’s needs in technical training regulations. These laudable policy efforts should be developed in collaboration with all key stakeholders in the semiconductor ecosystem and incorporated into the longer-term vision and strategy for the ecosystem (see section on firms’ business and operational environment).
Bilateral and ad hoc industry-academia linkages in skills development should be institutionalised
The Philippine semiconductor ecosystem features a strong degree of collaboration between government agencies, industry and academia, leading to mutually beneficial collaborations and successful government programmes. However, even if collaboration between universities and the semiconductor industry is deep and well established in skills development, it is not institutionalised. Typically, individual companies sign memoranda of agreement or understanding with individual universities, which can be used to endow faculty positions or fund scholarships and enable easier provision of training to students or teachers. These arrangements also help ensure a steady pipeline of human capital to semiconductor firms.
These bilateral relationships are a clear local strength for the Philippine semiconductor ecosystem, which the government should support. For example, this could include the development of template agreements or a one-stop shop within a relevant government agency to better enable universities and firms to enter into agreements.
The CIDR, a network of government-funded facilities, was established to serve as a research platform between industry and academia to ensure medium- and long-term technological competitiveness. It specifically acts to share resources among universities and enable human capital development. It could also act as a means of enabling more institutional collaboration, particularly for workplace-based learning, between the semiconductor industry and academia. However, the CIDR currently only focuses on developing the integrated circuit design landscape in the Philippines. In contrast, most of the existing ecosystem and workforce is in back-end semiconductor manufacturing, notably assembly, testing and packaging. Expanding the scope of the CIDR or developing separate resources to encourage more systematic training relationships between industry and the education and training system could help encourage more skilled workforce participation in the Philippine assembly, testing and packaging industry, thereby boosting labour productivity in the electronic component manufacturing industry.
Further, the benefits of these collaborations should be leveraged to ensure that their benefits can reach more universities and students. For example, input from individual firms on training programmes at specific universities could be used to update national curricula and train instructors in other universities. This could also enable a broader range of semiconductor-relevant skillsets, which would help achieve the government’s ambitious target of training 128 thousand engineers and technicians by 2028 (see also above).
Harness international ties to meet domestic priorities for human capital in the semiconductor industry
The international semiconductor industry is a key source of knowledge and skills that can help to strengthen the existing Philippine semiconductor ecosystem. The Philippines should deepen relationships with other economies and the institutions, companies and universities within them to help achieve its ambitious semiconductor human capital goals. In particular, international ties could be strengthened by leveraging relationships with universities abroad, such as forging partnerships with international universities to train instructors in new semiconductor-related technologies or develop specialised or dual courses. The AIM! Programme is understood to also include a focus on supporting internationalisation initiatives and enabling collaboration across borders in higher education.
Similarly, the Filipino diaspora remains a key source of potential talent for the local semiconductor industry. Stakeholders note that Filipino workers already work abroad in the semiconductor industry in other regional economies, such as Malaysia, Chinese Taipei or Thailand. The Philippines could learn from efforts in other jurisdictions to attract the skilled diaspora through fiscal incentives and other benefits related to housing and employment. Existing initiatives, like the Balik Scientist Program, could be expanded to target the semiconductor ecosystem and provide useful lessons.
References
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[4] ARTA (2021), Joint Memorandum Circular - Guidelines for Processing Business Permits, Related Clearances and Licenses in All Cities and Municipalities, Anti-Red Tape Authority, https://arta.gov.ph/wp-content/uploads/2021/06/JMC-Guidelines-for-Processing-Business-Permits-Related-Clearances-and-Licenses-2021.pdf.
[2] BOI (2013), Securing the future of Philippine Industries - Electronics, Board of Investments, Department of Trade and Industry, https://industry.gov.ph/industry/electronics/.
[5] BSP (2023), Executive Order No. 18 Constituting Green Lanes for Strategic Investments - Briefer and Updates, Bangko Sentral Ng Pilipinas, https://www.bsp.gov.ph/Pages/IRG/irg-files/EO%2018%20Briefer%20and%20Updates%20as%20of%201September2023%20with%20HB8039.pdf.
[1] DOST (2023), Electronics Industry Roadmap, Department of Science and Technology, https://pcieerd.dost.gov.ph/library/road-maps#emerging-technology-development-division-roadmap.
[9] DOST-PCIEERD (2022), Annual Report Philippine Council for Industry, Energy and Emerging Technology reseach and development, Department of Science and Technology, https://pcieerd.dost.gov.ph/images/banners/articles/annual_reports/2022_Final_Annual_Report.pdf.
[6] Francisco, K. (2022), “Electricity supply interruptions in the Philippines: Characteristics, trends, causes”, Discussion Paper, Philippine Institute for Development Studies.
[7] OECD (2021), OECD Competition Assessment Reviews: Logistics sector in the Philippines, OECD Competition Assessment Reviews, OECD Publishing, Paris, https://doi.org/10.1787/28843772-en.
[8] PCC (2021), “Competition policy issues in cargo services”, PCC Issues Papers, Philippine Competition Commission.