US microchip maker sets $1-B expansion of 2 PH plants

American microprocessors manufacturer Texas Instruments Inc. (TI) is investing up to $1 billion for the expansion of its Clark and Baguio City facilities in the face of the global chip shortage, Malacañang said Thursday. Presidential Communications Secretary Cheloy Velicaria-Garafil said US officials made the commitment during the US-Asean Business Council’s meeting with President Marcos in Malacañang on Wednesday.

Garafil said the American company is scheduled to submit “in two weeks” its application to expand its Clark and Baguio City sites that may reach the $1-billion Corporate Recovery and Tax Incentives for Enterprises (Create) threshold. Create, or Republic Act No. 11534 of 2021, covers reduction in the corporate income tax rate from 30 percent to 25 percent.

She said TI’s investment plans were in line with the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022. Simply referred to as the CHIPS Act, it was signed into law by US President Joe Biden on Aug. 9, 2022, to boost manufacturing of semiconductors in the United States through billions in subsidies and tax breaks.

Garafil said the law also covers investments that will poise US workers, communities and businesses to win the race for the 21st century.

Marcos welcomed TI’s investment plans. He said these are sectors in the economy the Philippines would like to be involved in. He pointed out the country has a workforce “that is accustomed to working with foreign corporations.”

Garafil said the Philippines has undertaken “a very comprehensive program of upskilling and reskilling its workers to be able to take advantage of the new niches in the labor demand and the labor market.”

Chips are down

She added the US-Asean Business Council has a membership of more than 170 companies that generates almost $7 trillion in revenue and employs more than 14.5 million people.

A recent Reuters report explained the shortage in microchips stemmed from different factors brought by shutdowns of factories and increased demand for products that use microchips during the Covid-19 pandemic. Sanctions against Chinese tech companies have also exacerbated the crisis.

Panic buying of chips also caused the shortage, driving up costs of even the cheapest components of nearly all microchips, increasing prices of final products.

In January, leaders of the Semiconductor Industry Association (SIA) made a courtesy call on Trade Undersecretary and Board of Investments (BOI) managing head Ceferino Rodolfo and expressed confidence in the Philippines as a critical player in the global semiconductor industry and a major hub for semiconductor assembly and test manufacturing.

SIA represents 99 percent of the semiconductor industry in the United States by revenue and two-thirds of non-US chip firms. Many of SIA’s member companies have significant investments in the Philippines including Analog Devices, Onsemi and Texas Instruments, among others.

A report from the Semiconductor and Electronics Industries in the Philippines Foundation Inc. said as of the November 2022 year-to-date data, electronics exports reached $45.63 billion, or 62.36 percent of the total Philippine exports.

—With reports from Inquirer Archives and Reuters

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