THE

PHILIPPINE

ELECTRONICS

INDUSTRY

- THE DRIVER OF THE

PHILIPPINE ECONOMY

1. ABOUT SEIPI

2. THE PHILIPPINE

ELECTRONICS INDUSTRY2.1 WHERE IT HAS BEEN

2.2 WHERE IT IS NOW

2.3 WHERE IT IS GOING

SEIPI

ABOUT

SEIPI

SEIPIS E M I C O N D U C T O R & E L E C T R O N I C S I N D U S T R I E S I N T H E P H I L I P P I N E S I N C .

ABOUT SEIPI

Source: SEIPI

The leading and largest organization of

more than 250 foreign and Filipino

semiconductor and electronics companies in

the Philippines (including its allied and

support industries)

Its membership include leading global

players like Texas Instruments, Hitachi,

Toshiba, Sharp, Samsung, Analog Devices,

Amkor Technologies, Sunpower, Cypress,

Moog, Fairchild, Maxim, Continental Temic,

Lexmark, Rohm, and Filipino companies

such as IMI, Ionics, Fastech, First Philec, etc.

SEIPI

ABOUT SEIPI

Source: SEIPI

THE INDUSTRY IT REPRESENTS

- accounts for 2/3 of the total Philippine exports

- directly employs more than half-million engineers,

technicians and operators

- invest an average of US$ 1 B annually

- provides the transfer of best global practices

on high-technology manufacturing

SEIPI

ABOUT THE

PHILIPPINE

ELECTRONICS

INDUSTRY

WHERE IT

HAS BEEN

Philippine Exports WITH Electronics

TOTAL PHILIPPINE EXPORTS1995-2010

SEIPISource: NSO

$17$20

$25

$29

$35

$38

$32$35 $36

$39$41

$47

$50 $49

$38

$51

$10 $11 $12 $11 $11 $11 $10 $10$12 $12 $13

$17$19 $20

$16$20

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

US

$ B

ILLIO

NS

Philippine Exports WITHOUT Electronics

TOTAL PHILIPPINE EXPORTS1995-2010

Source: NSO

SEIPI

….FROM COCONUT CHIPS TO MICROCHIPS

Agro-Based

49%

Mineral Products -

18%

ELECTRONICS - 3%

Garments - 7%

Other

Manufactured

Products – 10%

Forest Products - 10%

Others - 2%

1970

ELECTRONICS -

58%

Garments and Textiles - 6%

Machinery and Transport - 4.4%

Wearables - 0.16%

Food - 2.9%

Motor Vehicles and Parts - 1.74%

Home Furnishings - 1%

Marine Products - 1%

Giftwares - 0.45%

Construction Materials - 0.49%

Organic Products - 0.18%

Mineral Products - 2.1%

Others - 13%

2009

Sources : DTI/NSO

CHANGING FACE OF

PHILIPPINE EXPORTS

SEIPI

SEVEN OUT OF THE WORLD’S TOP 20 CHIPMAKERS

ARE OPERATING IN THE PHILIPPINES

TIPI Philips Fairchild

Analog Sanyo On Semi Rohm

Source: SEIPI

THE TOP CHIPMAKERS

SEIPI

THE WORLD’S

TOP ELECTRONICS FIRMS

FOUR OF THE LARGEST HDD PRODUCERS

ARE IN THE PHILIPPINES

Hitachi Toshib

a

Fujitsu NEC

CEBU MITSUMI – employs >20K, biggest

employer in the Philippines; manufactures

computer peripherals and components such

as CD-R, CD-RW, optical pick up

Source: SEIPI

SEIPI

EPSON – employs 5,000, one of the top 3 terminal

printer production base of global Epson group,

producing its 10 millionth printer recently

LEXMARK – produces 40 million printheads/year

AMKOR – employs 8,000 people for its IC

packaging with 400 formats, from leadframe to

BGA solutions

THE WORLD’S

TOP ELECTRONICS FIRMS

Source: SEIPI

SEIPI

HOMEGROWN SMS & EMS FIRMS

… and a cluster of homegrown ODMs time recorder,

avr, power supplies, alarm systems, electronic

ballasts, testers, gps tracking, automated toll

collection, others

IMI Ionics PSI Fastech Team

Source: SEIPI

SEIPI

ICs Connectors

Magnet

Capacitors Transistors

Actuator

Packaging

Materials

Diodes

Base

&

Cover

Plastic

Molded

Parts

Screws

Coils

Resistors

PCB/

PCBA

Metal

Pressed

Parts

Spacer

Ring

Motors

Magnetic

Head

Carriage

Assembly

…SUPPLYING THE WORLD WITH 2.5 MILLION HDD PER MONTH

A GROWING BASE OF SUPPLIERS

FOR HARD DISK DRIVES (HDDs)

Source: SEIPI

SEIPI

Microprocessors

Analog Devices Flash Memory

Power Devices

Logic Devices

Strong in assembly, test and packaging design

for semiconductor manufacturing services…

…CAPTURING 10% OF THE SMS WORLD SUPPLY

Memory Chips

DSPs

Opto Devices

TEST AND PACKAGING DESIGN

Source: SEIPI

SEIPI

COMPETITIVENESS OF THE

ELECTRONICS INDUSTRY

CRITICAL MASS OF GLOBAL PLAYERS

SEIPISource: SEIPI

NUMBER OF FIRMS: 959 COMPANIES

THE COMPANIES IN THE

ELECTRONICS INDUSTRY

NATIONALITY:

- 72% Foreign

- 28% Filipino

Philippines28%

Malaysia2%

Singapore2%

Taiwan4%

Europe7%

USA9%

Korea10%

Others8%

Japan30%

SEIPISources: BOI/PEZA

LOCATION OF

ELECTRONICS COMPANIES

Metro Manila42%

Calabarzon48% Cebu

7%

Northern/

Central Luzon3%

Sources: BOI/PEZA

SEIPI

ISO Certified

Runs at 3 Shifts a Day

In-house Training Capability

Practices the Best Known Methods

in Manufacturing (JIT,TQM, 5S, QPIC)

Non-Unionized with Low Turnover

Capabilities Range from IC Packaging,

PCB Assembly, Full Product Assembly

PROFILE OF TYPICAL

ELECTRONICS COMPANIES

Better Compensation Package

Operates with clean rooms and fully

integrated manufacturing facilities

Located in Economic Zone or BOI Registered

Source: SEIPI

SEIPI

COMPETITIVENESS OF THE

ELECTRONICS INDUSTRY

PEOPLE

SEIPISource: SEIPI

STRENGTHS OF FILIPINO

ELECTRONICS WORKERS

AVAILABLE - a labor force of 36 Million

- about 100,000 engineering

and technical graduates

every year

TRAINABLE &

TECHNICALLY

CAPABLE - need only 6-8 weeks

to learn technical skills

COST COMPETITIVEFunctional Head - US$ 38400-73386/annum

Production Engineer - US$ 3466-10066/annum

Production Operator - US$ 1980- 3869/annum

FLEXIBLE - Multi-skilled, English speaking

- Operates at 3 shifts /day

- Minimal turn-over rate

SEIPISource: SEIPI

0

100

200

300

400

500

600

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

74 80 90

120

160

220

250280

315 307

335 346376

402438

460

435

476500

TH

OU

SA

ND

S

2010:

FIRST TIME > 500K DIRECT JOBS

DIRECT EMPLOYMENT

OF THE INDUSTRY

For every one direct job, 7 indirect jobs are created

SEIPI

Sources: National Statistics Office

Bureau of Export Trade Promotion, DTI

ELECTRONICS EXPORTS 1992 - 2010

-

5

10

15

20

25

30

35

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2.97 3.78

4.89

7.55

10.61

14.98

19.87

25.34 27.07

21.60 23.76

24.17

26.64 27.30

29.60 31

28.50

22.20

31.1

US

$ B

ILL

ION

S

2010: THE HIGHEST IN HISTORY

SEIPI

DESTINATIONS OF

ELECTRONICS EXPORTS

Source: Bureau of Export Trade Promotion, DTI

EXPORTS DESTINATIONS: US/EU - 36%

ASIA - 64%

USA-14%

EUROPE-22%

JAPAN - 15%

OTHER ASIA - 36%CHINA - 13%

SEIPI

INVESTMENTSHISTORICAL: 1992-2010

0.00

0.50

1.00

1.50

2.00

2.50

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0.04

0.22

1.29

2.16

1.08

1.47

0.670.79

1.24

0.72

0.270.23

0.44

0.78 0.75

1.40

0.420.47

2.27

US

$ B

ILL

ION

S

2010: THE HIGHEST IN HISTORY

• 7TH TIME OVER US$ 1B

SEIPI

ABOUT THE

PHILIPPINE

ELECTRONICS

INDUSTRY

WHERE IT

IS NOW

ELECTRONICS EXPORTS: January 2009 – June 2011

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

1,3451,352

1,6201,684

1,8111,948

1,915

2 ,0582 ,250

2 ,1622 ,148

1,8812 ,034

2 ,072

2 ,416

2 ,183

2 ,554

2 ,9042 ,862

2 ,989

3 ,478

2 ,987

2 ,3332 ,256

2 ,1422 ,015

2 ,238

1,9591,886

2 ,211US

$ M

ILLIO

NS

2009 2010 2011

MoM: 17.21%

YoY: -23.89%

CGR: -10.82%

Source: NSO SEIPI

ELECTRONICS IMPORTS: January 2009 – May 2011

Source: NSO

2009 2010 2011

MoM: +0.60%

YoY: +11.24%

CGR: +20.14%

SEIPI

ELECTRONICS INVESTMENTS1992 – Jan-Jun 2011

Jan-Jun 2011: US$ 530M

Source: PEZA

YEAR 2011 PROJECTION

SEIPI

FROM MODERATE TO

FLAT TO NEGATIVE

GROWTH

• Japan Supply Chain

Disruptions

• US/EU Debt Issues

• Middle East/Libya Crisis

Source: SEIPI

ABOUT THE

PHILIPPINE

ELECTRONICS

INDUSTRY

WHERE IT

IS GOING

Several large multinationals

are revisiting their long-term strategies

and are making decisions now.

There’s a growing sentiment to reassess

their geographical footprint in Asia.

BUSINESS ENVIRONMENTAL SCAN

SEIPI

However, it is also clear that China is not the

only player.

The China + + strategy is likewise still in play.

Vietnam is very popular. Malaysia continues to

have the right infrastructure. Indonesia is

gearing up.

The Philippines is in a very good situation to

be part of the action. The timing is now!

SEIPI

BUSINESS ENVIRONMENTAL SCAN

Given this business condition, the

industry is bullish to sustain, if not

further increase the growth of the

semiconductor and electronics in the

Philippines

Moreover, there is growing optimism

driven by the general industry feeling

that the new government of President

Aquino is morally upright and is full of

promise

INDUSTRY OUTLOOK

SEIPI

THE INDUSTRY TARGET

The industry aims to double-up

electronics exports

From US$ 22 Billion in 2009

To US$ 50 Billion in 2016

SEIPI

INCREASING INVESTMENTS

SEIPI

ANNUAL TARGET OF US$ 2 BILLION

PROMOTE THE PHILIPPINES

AND THE GREAT FILIPINO

ELECTRONICS WORKERS

DEVELOPING TECHNOLOGY ROADMAP

SEIPI

MANUFACTURING

PACKAGING, ASSEMBLY, TEST, WIRE

BOARD, RF COMPONENTS, POWER

MANAGEMENT, ETC.

PV/SOLAR

AUTOMOTIVE

ELECTRONICS

MASS DATA

STORAGE

R&D

LOWER COST OF BUSINESS

SEIPI

LOWER COST OF POWER

A CONDUCIVE BUSINESS ENVIRONMENT

SEIPI

• INFRASTRUCTURE

• SECURITY/

PEACE AND ORDER

• NON-DISRUPTIVE

LABOR

• CONTINUE WHAT

HAS BEEN GIVEN

SEIPI

• THE INDUSTRY

TO ACT AS DRIVER

• THE GOVERNMENT

TO ACT AS ENABLER

PUBLIC-PRIVATE PARTNERSHIPTHE ELECTRONICS INDUSTRY WORKING

IN PARTNERSHIP WITH THE GOVERNMENT