THE Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) said it is hoping to partner with American companies to build the semiconductor supply chain in the Philippines.
“What we’d like to do is to hopefully work with the Chips Act [Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022] and the US company because it’s expensive to build the wafer fab,” Seipi President Danilo C. Lachica told a forum organized by the Board of Investments (BOI) last Thursday.
According to the Seipi chief, the semiconductor company in the Philippines is “anchored much” on US companies.That’s why, he added, “if we can convince them to build a proof of concept wafer fab then you’ll build that supply chain in the Philippines.”
Lachica noted the semiconductor supply chain includes the integrated circuit (IC) design, wafer fab and assembly, test and packaging.
The Seipi chief underscored that the wafer fab is the “big gap in between,” albeit having the assembly, test and packaging and the IC design.
Lachica illustrated the current process, saying that what they do today is to “send the tapes or Gerber files to a wafer fab specifically to [Taiwan Semiconductor Manufacturing Company] TSMC.”
IP protection
HOWEVER, Lachica mentioned the challenges that come with this, such as cost, lead time and “the more concerning thing,” he said, would be the protection of the [intellectual property] IP.
“Of course when you send the chips there then you expose the secrets to the world so what we want to propose is to… with the help of the government, [Department of Trade and Industry] DTI, Department of Science and Technology [DOST] and the other possible sources is to build a large scale wafer fab in the Philippines and hopefully some of the Chips fund would be carved out for that.
Meanwhile, the chief of the organization of foreign and Filipino electronics companies in the Philippines divulged that “there is news that the Chips Act will probably allocate some funds for the Philippines.”
While the amount is yet to be revealed, he said “there’s going to be some funds allocated for of course for supply chain, for semiconductors specifically and that supply chain would probably lend itself towards security in the West Philippine Sea in terms of protecting the shipping delay, also for sustainability and third would be for Advanced Manufacturing Workforce Development.”
Wafer fab is a semiconductor processing facility which turns wafers into integrated circuits, according to Analog Devices Inc., an American multinational semiconductor firm.
Last year, Lachica told the BusinessMirror that the US Chips Act will help improve the Philippines’s supply of semiconductor wafers in the long-term.
An opportunity
Meanwhile, in a courtesy call of BOI Managing Head Ceferino S. Rodolfo last January 2023 with the Semiconductor Industry Association (SIA) President and CEO John Neuffer, the SIA chief noted that “while the Chips Act aims to increase the capacity of the US semiconductor industry, we recognize that we cannot do it all in the US.”
“And that’s where the countries like the Philippines have an opportunity,” Neuffer added.
He said the Chips Act encourages manufacturing in the US, but rather than reshoring all manufacturing activities, “it is more of rebalancing the supply chain.”
The pandemic has forced global businesses to rethink their supply chain strategies and consider diversification of suppliers to mitigate disruptions in their business operations, BOI said in its statement in January.
SIA represents 99 percent of the US semiconductor industry by revenue and two-thirds of non-US chips firms. The BOI noted that many of SIA’s member companies have “significant” investments in the Philippines including Analog Devices, Onsemi and Texas Instruments, among others.
