In order to achieve long-term growth in the semiconductor industry, the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) is pushing for the development of the wafer fabrication and production segment of the industry. 

SEIPI President Dan Lachica told reporters that the group would like to gradually shift the Philippine semiconductor industry’s dependence on its wafer supply sourced from Taiwan, and instead, invest in enhancing the country’s capacity to produce its own semiconductor wafers. 

Taiwan currently supplies 70 percent of the global wafer supply. Lachica cited geopolitical issues between China and Taiwan as factors to disrupting the Philippines’ wafer supply chain, adversely affecting the $49-billion local industry and possibly displace three million direct and indirect jobs. 

“We have a growing integrated circuit (IC) [fabrication] design industry. But right now, their tapes, they send it to TSMC (Taiwan Semiconductor Manufacturing) in Taiwan, you might lose the intellectual property, it costs more, [and] it takes longer so we really need our own capability,” said Lachica at the sidelines of the Philippines-India Tech Summit in Taguig City on March 5. 

Lachica described the national government, particularly Special Assistant to the President for Investment and Economic Affairs Frederick Go's support for the semiconductor industry as “strategic,” hopefully heeding the group's targets of growing both the front and backend assembly processes, IC design, and wafer prototypes or tapeouts production. 

Last February, during US Undersecretary for  Economic Growth, Energy, and the Environment Jose Fernandez's visit to the Philippines, the Board of Investments (BOI) said it is exploring the possible construction of a lab-scale wafer fabrication plant. 

SEIPI proposed the prototype wafer lab in partnership with the Department of Science and Technology (DOST). 

To date, the country cannot yet build and sustain a full-size wafer fab since nanotechnology wafer fabs cost around $15 billion to $20 billion, he explained. 

“We don't have that kind of money. But again, start with small steps, and then grow the capability. We also have to train our talent because we don't have wafer fab experience. So we need the talent to learn about the new technologies, the new processes,” said Lachica. 

“Eventually we need the Philippine Government to convince the US government to encourage a couple of US multinationals here to build a wafer fab,” she added. 

The Philippines is one of the countries that may receive funding from the US through the CHIPS and Science Act that allocates roughly $52 billion to expand the US’ semiconductor supply chains. $500 million of the fund will be distributed among the beneficiaries over five years. 

However, Lachica noted that the mindset of the US remains focused on backend assembly including testing and packaging. 

“But we're trying to reshape their mindset to consider a semiconductor wafer fab to what we call the front end, fabricating the wafers. CEOs won't decide for themselves. So it has to be governments, using the CHIPS Act to convince this,” he remarked. 

If the country is able to develop the wafer fab, this could result in the growth of high value semiconductor exports. 

Lachica is optimistic that there is enough political will to convince the President and Cabinet to support the frontend assembly. 

“There might be some doubting Thomases but hopefully, the strategic vision will prevail. Because otherwise like I said, if we don't do something about it, we will lose the electronics industry in the Philippines,” he added. 

As for the industry's state today, the sector is forecasting modest growth throughout 2024, driven by sustained global demand for electronics products, despite the geopolitical instability disrupting trade and the supply chain and oversupply of inventory last year.