Electronics exports seen to fall by 12%

Exports of the locally manufactured electronics components will likely contract this year, marking the second consecutive year of decline for the closely watched industry barometer.

The contraction—expected to range from 10 to 12 percent by yearend—also represents a reversal in the position of the Semiconductor and Electronics Industries in the Philippines Inc. (Seipi), which earlier predicted that its exports would grow by 5 percent in 2013.

Seipi said the decline would be driven largely by the weakness in global demand, specifically for semiconductors.

While double-digit growth is seen in the automotive and consumer electronics sectors, weakness in semiconductors, which comprised 76 percent of the industry export, drove the contraction, the group said Monday.

In 2012, electronics exports were down by 5.2 percent to $22.5 billion from $23.7 billion in the previous year.

According to Seipi president Dan Lachica, the organization’s board decided to reduce its projections this year from the original target of a 5-percent growth, due also to dropping prices amid rising export volumes.

Seipi members are not even shutting down for the holidays to cater to this higher demand, he said in a briefing Monday.

Despite this year’s export revenue contraction, Seipi is also projecting a recovery in 2014, which may see a meager 5-percent growth in electronics exports, Lachica said.

This forecast is based on continuing lower prices of semiconductors, which may be partly offset by the continuing strength in the automotive and consumer markets, as well as the incremental output from new investments.

Seipi members are also optimistic of future prospects as many companies currently operating in the Philippines are continuously pouring in new investments, while more foreign firms are eyeing to locate in the country.

Sunil Banwari, president and general manager of On Semiconductor Philippines Inc. and a Seipi board member, noted that his company is planning to invest an additional $8 million to boost operations, given the bright outlook on the Philippine electronics industry.

Richard Cohen, a Seipi board member and vice president for Asia factory operations of Maxim Philippine Operating Corp., shared the sentiments of Banwari, as he said that electronics firms in the country may see growth next year. Some sectors, he added, are expected to grow faster, specifically for the automotive electronics.

Other Seipi officials also mentioned increased investments by their respective companies, as well as rising interest from foreign firms, particularly Japanese companies which are eyeing the Philippines as an alternative investment site due to rising labor costs in China.

Data from the National Statistics Office showed that electronics exports fell by 13 percent to $13.663 billion in the first eight months of the year from $15.7 billion a year ago. Semiconductor comprised the chunk of electronics exports at $10.4 billion, down 11.6 percent from a year ago.

Automotive and consumer electronics both registered export sales growths from January to August this year to $362.75 million and $198 million, respectively.

Seipi said the local industry must move toward the higher end of the value chain.

“[We] should look to other areas within the industry to be able to meet its objectives of becoming a $112 billion export industry by 2030,” it added.