US tech company to invest $40M more in PH facility

On semiconductor, a manufacturing company based in Phoenix, Arizona, will invest an additional $40 million in its Philippine manufacturing plants over the next two years to better serve growing global demand for electronic goods, the top executive of its local unit said.

Of the additional investment, $30 million will be set aside for the probe, assembly and test facility in Carmona, Cavite.

The remainder will go to the assembly and test factory in Tarlac City, said Sunil Banwari, ON Semiconductor Philippines president and general manager.

The semiconductor manufacturer will install “very high-tech” assembly, probing and testing equipment in its Philippine sites, Banwari told reporters Friday.

With the new equipment, an array of new products will be churned out by the Philippine manufacturing arm, the executive said.

Higher value products

At present, the Philippine subsidiary produces electronic components for vehicles, wireless communication devices such as cell phones and tablets, computing devices, industrial and military equipment, and consumer goods.

Banwari said the Philippine factories contributed the most—about $2.8 billion a year—among ON Semiconductor’s Asian plants.

In terms of production volume, the Philippine unit ranks third in Asia after the Chinese and Malaysian facilities.

“China produces more volume, but we in the Philippines have higher value products,” Banwari said.

Semiconductor and Electronics Industries in the Philippines Inc. (Seipi) president Dan C. Lachica said the industry could expect more foreign firms to invest in the country, now considered by most to be a viable manufacturing site.

“The Japanese are looking at the Philippines, especially after the disaster in their country,” Lachica said, referring to the aftermath of the strong earthquake that shook Japan in 2011.

“Japanese investors will continue to look seriously at the Philippines. We’re hoping Americans and Europeans will also invest here.”

Rethink

But now, some foreign investors appear to be having a rethink because of the high power costs in the country and the implementation of a truck ban in the city of Manila, Lachica said.

In 2013, only $918 million worth of new electronics investments were registered in the country’s economic zones—a 65.8-percent drop from the $2.684 billion posted in 2012, data from the Philippine Economic Zone Authority (Peza) showed.

Last year was a challenging one for the local industry because of the economic slump in the United States and Europe—the top destinations of Philippine electronics exports, Lachica said.

“There was one particular company looking at the Philippines last year, but the project was stalled. I’m still hoping they will come,” he said.

This year is shaping up to be a rosier one on the back of recovering markets, as well as increasing demand for automotive, industrial, communications-electronics and consumer products, Lachica said.

“There are signs of an upsurge in global demand. There are some indicative factors spelling well for the industry,” he noted.

The latest National Statistics Office (NSO) data showed that shipments of electronic products jumped 22.1 percent to $1.793 billion last January from $1.469 billion in the same month of 2013.

Last year’s exports declined 3.97 percent to $21.8 billion from $22.7 billion in 2012.

Electronic products comprise the biggest chunk of the country’s merchandise exports.

Still, the industry group is keeping its 5-percent export growth target for the year, as the gains being enjoyed by exporters so far were being slashed by production delays caused by the truck ban in Manila, Lachica explained.

The industry executive cited how a company lost an estimated $20,000 a week due to two- or three-day delays in deliveries, while another firm had shut down operations and was unable to pay its employees.

Lachica said Seipi is currently compiling data on actual industry losses due to the truck ban although, he said, the Citi research estimate of between P61.2 billion and P320 billion could be accurate.

No solution in sight

“We haven’t seen any resolution to the truck ban. As difficult as it may be, we’re trying to find mutually beneficial solutions,” he said, pointing to some proponents who were promoting the Batangas and Subic ports as alternative sites for Manila.

In a related development, the Technical Education and Skills Development Authority (Tesda) and Semiconductor and Electronics Industries in the Philippines Inc. on Friday signed a memorandum of agreement under which the state-run agency would set aside P30 million for capacity-building and training of 5,172 industry workers, as well as technical-vocational students from April to November this year.

“The allocation of the fund will enhance the employment opportunities of the trainees. It will also attract global investors through the pool of qualified manpower,” Tesda director general Joel Villanueva said.