Japanese firm NIDEC to invest $500 M to expand Subic operation

Japanese firm NIDEC, a global player in electronics manufacturing, is investing $500 million to expand its existing manufacturing operation in Subic Bay freeport.

Subic Bay Metropolitan Authority (SBMA) Chairman and Administrator Rolen C. Paulino said over a radio interview Thursday, Feb. 9, that NIDEC’s expansion will be one of the highlights to be discussed during the visit of President Ferdinand R. Marcos Jr. in Japan.

Trade and Industry Secretary Alfredo E. Pascual said they met with 11 major Japanese companies with investments in the Philippines during the Sectoral High-Level Round Table Meeting (RTM) with Semiconductors, Electronics, and Wiring Harnesses Companies on Thursday, Feb. 9, in Tokyo.

Pascual added that 11 Japanese electronics companies presented their current operations and future investment plans. Present during the roundtable meeting were companies namely, Brother Industries, Ltd., IBIDEN Co., Ltd., Murata Manufacturing Co., Ltd., Seiko Epson Corporation, NIDEC-SHIMPO Corporation, Japan Aviation Electronics Industry, TDK Corporation, Sumimoto Wiring Systems Ltd., Yazaki Corporation, Yokowo Co., Ltd., and Panasonic Corporation.

Paulino said the NIDEC expansion is expected to create 2,400 new jobs. He further said that SBMA already arranged NIDEC’s plans ahead of the President’s state visit where he would be holding a roundtable meeting with semiconductor, electronics, and wiring harness Japanese investors in the Philippines.

Paulino noted that NIDEC manufactures the “heart” or the motherboards for robots in the freeport.

Earlier reports quoted Paulino as saying that the NIDEC investments would be done in two phases to be fully completed by 2025. By then, the company should have attained production target of 350,000 per year, all of which are exported to the US, Europe, Japan, Korea, China, India and Brazil.

At the roundtable meeting, President Marcos shared the country’s vision to become hubs of excellence for sectors where the country has comparative advantage as regional hub printers, wiring harnesses and other electronic goods.

According to Pascual, the dialogue with the Japanese electronics firms “enabled Japanese partners to air their concerns and us to explain what were doing to resolve their concerns.”

Pascual reported that in 2021, Japan was the Philippines’ second major trading partner, third export market, and second import supplier. Japan was also the Philippines second largest source of foreign direct investments in the same year.

As of September 2022, about 900 Japanese enterprises are hosted in the various economic zones in the country, infusing over $12 million in investments.

For the first nine months of 2022 alone, the Japanese investors generated more than $13 billion in export income, and created over 350,000 direct jobs for Filipinos.

In terms of trade, Philippine exports to Japan in 2021 grew by almost seven percent. “This growth is due mostly to the increased exports of ignition wiring sets and digital monolithic integrated circuits,” the trade chief noted.

Also, in 2021, Philippine imports from Japan rose by almost 30 percent, again largely due to electronics products.

In addition to semiconductors and electronics, Japan also plays a big role in the country’s exports of wiring harness and office peripherals.

“With demand expected to grow in the global market, we would like to explore how we can encourage you to expand and upgrade your operations on our shores. Let us discuss how we can do this and make your investments happen in the Philippines,” Pascual told the Japanese electronics companies.

The manufacturing of semiconductors, electronics, and wiring harnesses is considered as one of the top contributors to the country's economic growth.

In 2021, the Philippines was the 4th largest exporter of wiring harness in the world after Mexico, China, & Romania. Global market share of wiring harness exports is 7% (USD2.3 billion annual sales). Further, the Philippines is also one of the lowest cost producers of wiring harness in the world based on export value and quantity.

The Philippine electronics industry is classified into 73 percent Semiconductor Manufacturing Services (SMS) and 27 percent Electronics Manufacturing Services (EMS). Most of the electronics businesses in the country operate in four key areas: Metro Manila, CALABARZON, Northern/Central Luzon and Cebu. These companies practice the best known methods in manufacturing, with capabilities ranging from IC packaging, PCB Assembly and Full Product Assembly.  The industry also employs over three million direct and indirect workers.