In a study done by the Semiconductor and Electronics Industry of the Philippines, Inc., (SEIPI) the electronics and semiconductor sector is considered one of the leading industries in the Philippines. In the past two decades, the industry’s share in the country’s exports has been steadily increasing from about 20 percent in 1991 to a peak of about 70 percent in 1998.
In 2010, the industry generated revenues of about $3 billion. According to SEIPI, the industry is poised to boost its exports to $50 billion in 2016 if given a conducive business environment and the necessary infrastructure support.
The industry’s potential will be fully realized with the establishment of the Philippine Electronics Product Development Hub (EPDC).
Normally, local electronic companies send samples abroad for product design and testing, which may cost as much as $5,000 to $30,000. Through the EPDC, the production costs will be significantly reduced. There will also be a shorter turn-around time, unlike results from tests conducted abroad which may take months.
Moreover, companies can also easily mitigate risks to avoid certification test failure because of its accessibility. Thus, an increased foreign investment in electronics industry is expected.
According to the Electronics Industries Association of the Philippines, Inc. (EIAPI), the country’s present electronics industry is only concentrated on a small part of a bigger electronics industry supply chain. There are other important areas that the Philippines is not involved in and yet its neighbors, especially India and China, not to mention Taiwan, Singapore, Malaysia, and Thailand have already explored.
EIAPI noted that the Philippines assembles electronic components that were designed and developed in other countries These components eventually have to be designed into end-products that the public buys as cellular phones, TVs, notebooks, etc.
The assembly of components and end-products is an important part of the electronics supply chain, but the Philippines should also focus its development on other parts of the chain. This way, the country could gain an even bigger market share on areas like product design and development, prototyping, testing, marketing, and support.
According to a study made by the Nomura Research Institute of Japan the gaps in the supply chain can be addressed if the Philippines will support and upgrade the local research and development capability by putting up electronics laboratories and testing facilities.
Putting up electronics facilities is necessary to support the creation of more technical and engineering jobs in the Philippines. As such, local and emerging companies would tap the local workforce to design and manufacture quality products. This would spawn a more robust industry, comprising not just product consumption or exportation of raw materials and manpower, but also the manufacturing of products.
According to a previous survey conducted from an electromagnetic compatibility (EMC) market study by the Advanced Science and Technology Institute, local electronics companies indicated that cost-effectiveness is first among the benefits of having locally established facilities such as an EMC test facility.
The survey’s respondents – especially those with experience in the whole EMC certification process – estimate that the total cost of undergoing the process will be cut in half. According to EIAPI, EMC certification process costs could go as high as $30,000. Other benefits identified in the study were shorter test lead time, better correspondence between the client and the test house, the opportunity for research and development (R&D), and the risk mitigation of failing certification.
The EPDC project is set to strengthen the local electronics and semiconductor industry by enabling local companies, start-ups, and the academe to conduct their own initiatives for R&D, design, and prototyping of electronic products.
The establishment of the EPDC enables the development of hardware and software industries of the country. The EPDC can also host facilities that can be used by companies or schools to design, develop, and test hardware and software for electronics products for their intended applications.
The EPDC shall adjust to the industry requirements as the industry develops and grows. This will not only benefit the local electronics industry but also attract foreign investors who are seeking a more conducive business environment with readily available infrastructure.
Also, once in place, local companies need not send their designs abroad for fabrication and compliance testing. This will cut costs and guarantee shorter turn-around time, which will be most beneficial for companies who cannot afford to put up their own product development facilities.
Thus, as what DOST Secretary Mario G. Montejo said, “(The Philippines) can graduate from being as mere assembler of goods to being its designer, manufacturer, and marketer.”
Written by: Engr. Peter Antonio B. Banzon, MS Department of Science and Technology-Adavanced Science and Technology Institute (DOST-ASTI) Published by: Department of Science and Technology-Science and Technology Information Institute (DOST-STII)