The projected recovery of the electronics industry, the single largest export of the Philippines, is at risk due as production capacity has been affected due to shortage of semiconductor wafers, according to the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI).
“We are capacity constrained by the availability of imported semiconductor wafers since we do not have semiconductor wafer fabrication factories in the Philippines. Unfortunately, there is still a global shortage of wafers because factories are constrained by the longer lead times of wafer processing equipment,” said SEIPI President Dan Lachica.
He said the recovery in the semiconductor wafer global shortage may stretch to at least 6 months.
Lachica noted that while the industry is still on track with its 7 percent growth target this year, the global shortage of semiconductor wafers may affect operation for the rest of the year.
“The effect will be the lost opportunity to increase our 7 percent growth projection,” he said. Wafers are used to test, assemble, package and use for end products.
Globally, shortages of semiconductors are battering automakers and tech giants. Aside from the billions of dollars needed to build a semiconductor fabrication facility, returns are not also assured.
Aside from huge capital requirement, experts said that chips are difficult to produce. Manufacturing a chip typically takes more than three months and involves giant factories, dust-free rooms, multi-million-dollar machines, molten tin and lasers. The end goal is to transform wafers of silicon—an element extracted from plain sand—into a network of billions of tiny switches called transistors that form the basis of the circuitry that will eventually give a phone, computer, car, washing machine or satellite crucial capabilities.
According to a Bloomberg report, China has already made chip self-sufficiency a national priority in its latest five-year plan, while the US has moved to build a secure supply chain by reviving domestic manufacturing.
Aside from the global shortage of semiconductors, Lachica said the domestic industry is also encountering issues with the slow rollout of vaccines coupled with hesitancy of some employees to get inoculated.
SEIPI has already asked the Inter Agency Task Force (AITF) to prioritize the electronics workforce as essential economic workers.
The industry has also been bagged by travel restrictions on expats and foreign technical support for new product/ technology investments.
In addition, they complained of high operating costs due to expensive utilities, logistics, and employee shuttle services. The industry is also suffering from delays in the release of shipments due to system glitches and infections, aside from dissonant policies from the Department of Environment and Natural Resources General Effluent Standards and local government units.
The industry has also issues in terms of funding for technology/product advancement and worker training/upskilling.
Lachica, however, said they are working with the Department of Trade and Industry, IATF, Philippine Economic Zone Authority, Anti Red Tape Authority, Bureau of Customs, DENR, Technical Education Skills and Development Authority and other government agencies to address the issues.
Despite the challenges, Lachica said they are still on track to hit the 7 percent growth target this year.
For March year-to-date, the Philippine Statistics Authority (PSA) reported a robust 8.9 percent. “That’s better than the -8.7 percent contraction in 2020. This should be a recovery year for the industry,” said Lachica.