the philippine semiconductor and electronics … · 2018-03-16 · the philippine semiconductor and...
TRANSCRIPT
THE PHILIPPINE SEMICONDUCTOR and ELECTRONICS
INDUSTRY ROADMAP
Disclaimer: This study is for information only. It does
not imply recommendation or endorsement by the
BOI/DTI. Any views or opinions presented in this study
are solely representative of the industry associations
involved and do not necessarily represent those of the
BOI/DTI. Use of any part or excerpts of this report
should be with the permission of the author.
PRESENTATION OUTLINE
Where the industry has been
Where it is now Where it is going
How to get thereIndustry Challenges
WHERE THE INDUSTRY HAS BEEN
The electronics industry has been around for four (4) decades, beginning in the 1970s and has contributed immensely in terms of investments, exports, employment, technology and knowledge transfer.
Investments
Exports
Employment
0
1
2
3
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
0.040.22
1.29
2.16
1.081.47
0.670.79
1.24
0.720.270.23
0.440.78 0.75
1.21
0.420.47
2.272.452.68
US$
Bill
ion
s
-
10
20
30
40
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
2 2 3 4 7 913
18
25 2722
24 2427 27 30 31
29
22
31
24 23
US$
Bill
ion
s
For the last 2 decades the industry already contributed US$22 B worth of investments
For the last 2 decades the industry was able to export a total of US$422 billion export goods
2.1 million workers ranging from HS graduates to MS/PhDs benefit from the electronics industry
WHERE THE INDUSTRY HAS BEEN
The Philippine electronics industry is still the biggest contributor to the total Philippine exports, ending 2012 with a 43% share, equivalent to US$23 billion dollars.
With electronics
Without electronics
Source: NSO 2012 Data
NEW MANUFACTURING TECHNOLOGY, PROCESS EFFICIENCIES, TEST DEVELOPMENT
PACKAGING DESIGN,TEST DEVELOPMENT,PRE-MANUFACTURING
ASSEMBLY EFFICIENCIESINVENTORY MANAGEMENT
MARKETING RESEARCHSTRATEGY AND DEVELOPMENT SYSTEMS INTEGRATIONPRE-MANUFACTURINGDESIGN, TEST DEVELOPMENT
LOGISTICS MANAGEMENTASSEMBLY AND FINAL TESTINGSHIPMENT AND DISTRIBUTION
CUSTOMER SERVICE
RESEARCH AND DEVELOPMENTIN MATERIALS SCIENCE, NEW ALGORITHMS, EMBEDDED SOFTWARE DEVT
Software
Silicon Technology
Application
WaferFab Technology
Package Selection/Application
Productization
R&D
Ramp ToProduction
Distribution
Product
Product OrComponentDesign
LogisticsManagement
ProductionShipmentDistributionDirect OrderFulfillment
After SalesService
SEMICONDUCTOR MANUFACTURING SERVICE (SMS)
ELECTRONICS MANUFACTURING SERVICE (EMS)
Sourcing/strategic Purchasing
Procurement
Warehousing
Kitting
PCB Assembly
Component Assembly
Full SystemAssembly
Cable/harness Assembly
Repair andWarranty
Other After Sales Support
SEMICONDUCTOR DESIGN
1FOUNDRY
OPERATIONS
2PACKAGING/PRODUCT
DESIGN
3
OUTSOURCEDEMS
6
OUTSOURCEDSMS
4
OEM R&DMARKETING
5CUSTOMER
SERVICE
7
Source: 2002 Competitive Landscape Study, Deloitte & Tusch
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
For all electronics storage applications (e.g. tablets, camera, smart phones, etc.)
A Developing Supply Chain for HDD (a representative of EMS “Box” or assembly)
WHERE IT IS NOW
Where the industry has been
Where it is now Where it is going
How to get there
Semiconductor Manufacturing Service (SMS)- Components / Devices (Semiconductor)
Electronics Manufacturing Service (SMS)-Computer Related Products / EDP-Office Equipment-Consumer Electronics-Telecommunications-Communications / Radar-Control & Instrumentation-Medical / Industrial Instrumentation-Automotive Electronics
Source: NSO 2012 Data
There are about 420 electronics firms present in
the Philippines as of Q1 of 2013
Source: CDC, PEZA and BOI
Majority are Japanese, Korean and American firms
WHERE IT IS NOW Semiconductor (Components / Devices)
Computer Related Products / EDPs
Office Equipment
Consumer Electronics
Telecommunications
Communication/Radar
Control & Instrumentation
Medical / Industrial Instrumentation
Automotive Electronics
Aerospace
Solar / PV
LEVEL OF TECHNOLOGY VS ASIA
Philippines: Assembly, Packaging and Test
China: Design Centers, IC foundries, electronic equipment factories
Singapore: Targets sectors with higher technologies, particularly wafer fab (not in direct competition with RP), solar
Vietnam: Production of parts and components, smart phones
Malaysia: High-tech manufacturing, wafer foundries, R&D, structured supply chain, solar
Thailand: Assembly and Test, potentially taking business away from RP as it has lower mfg costs, solar, automotive
Taiwan: IC mfg, solar
WHERE IT IS NOW
WHERE IT IS NOW% Share of Electronics 2001 to 2013 (Jan to August only) % Share
2001 70%
2002 69%
2003 67%
2004 68%
2005 66%
2006 64%
2007 62%
2008 59%
2009 58%
2010 60%
2011 50%
2012 43%
2013 (Jan-Aug) 34%Share of electronics exports to total Philippine exports has been declining in the past 4 years
In US$ Billion
Source: NSO
EXPORTS BY SECTORJanuary – August 2013
Source: Figures – NSO, Companies - SEIPI
Positive:
IMI, Daeduck, Furukawa, Koyo, Moriroku, Kymco, Kedica, Standard, Gemphil, Te
mic Automotive, Fujitsu
BAG Electronics, Sharp
Shin-Etsu, Azbil, MOOG, KnowlesEpson, Canon, Brother
Negative:
EXPORTS BY SECTORJanuary – August 2013
TI, SEMPHIL, ROHM, Sanyo, STMicro, PD, OSPI, PSI, Tong Hsing, SDP
Toshiba, HGST, Amertron, Excelitas, Ibiden
Ionics EMS Remec, Continental, Optis Phils.
Source: Figures – NSO, Companies - SEIPI
Prima Tech, Gotoh, NANBU Phils., MEC & Beta Elec., Terumo
Negative:
2012 2013
EXPORTSJanuary 2012 – August 2013
Source: NSO
YTD: US$ 13.7B MoM: July 2013 vs. August 2013 (0.45%)
YoY: August 2012 vs. August 2013 (0.36%)
2012 2013
IMPORTSJanuary 2012 – July 2013
Source: NSO
YTD: US$ 8.7B MoM: June 2013 vs. July 2013 48.4%
YoY: July 2012 vs. July 2013 33.1%
The positive growth was brought about by 6 major commodity groups with positive Y-o-Y change: iron & steel, electronic
products, transport eqpt., other food & live animals, telecom eqpt. & electrical machinery and plastics.
INVESTMENTS1H 2012 vs. 2013
Source: PEZA
EMPLOYMENT2007 – 1H 2013
WHERE IT IS NOWIn spite of the decline % share in total exports. The electronics industry remains to be a great contributor to the Philippine economy in terms of:
If the electronics industry ceases to produce output, purchase inputs and distribute its products, GDP will drop by 28%
P1 increase in export sales generate at least 0.12 cents additional indirect taxes in the economy. In 2012, the industry’s total direct tax contribution was about US$690 million
P1 billion increase in investments create about 620 to 1,408 additional quality jobs in the economy
A P1 increase in export sales generate 0.11 cents to 0.25 cents additional household income in the economy
US$1 billion of investments create US$10.5 billion of exports from 2010 to 2012.
Source: University of Asia and the Pacific
WHERE IT IS NOWThe semiconductor and electronics industry still has the highest % impact on the country’s Gross Domestic Product
Source: University of Asia and the Pacific
Impact of the Hypothetical Loss of Selected Industries on Gross Domestic Product
% Drop in GDP
12.1%
14.9%
28%
Agriculture, Forestry and Fishery
Private Services
Semiconductor and electronics industry
INDUSTRY CHALLENGES: COSTSPOWER WAGES (IN US$)
200% INCREASE IN IMPORT / EXPORT CHARGES
Source; ECOP 20132013 KPMG Study
STORAGE RATES EXISTING RATE (PhP)
PROPOSEDRATE (PhP)
Foreign Imported Box (45 footer)
541.45 1,624.35
Foreign Exported Box (45 footer)
134.40 403.20
Foreign TranshippedBox (45 footer)
12.22 36.66
Philippine Ports Authority
INDUSTRY CHALLENGES: COSTS
IMPORTED RAW MATERIALS
TOP IMPORTED MATERIALS ORIGIN
Lead frames Taiwan, Malaysia, China
Molding Compound Japan
Die Attached Epoxy China
Tape and Reels Malaysia
Gold Wire China
Coil Print Vietnam
ESD Shoes Singapore
Finger cots Singapore
Total imports of the Phil. Electronics industry last 2012 is US$16 billion
INDUSTRY CHALLENGES: LEVEL OF TECHNOLOGY
VS
The Philippine electronics industry through the years has not gone beyond assembly and testing. Majority of our companies’ operations are in the form of raw materials processing, assembly and testing. Hence, the industry becomes highly susceptible to global demand fluctuations. The need to move gradually towards valued-added activities (i.e R&D) are being expressed
Source: 2002 Competitive Landscape Study, Deloitte & Tusch
INDUSTRY CHALLENGES: MARKETS
Global competition and new innovations are driving prices down (shrinking margins).
Companies must continually become more cost-efficient to remain profitable.
Short Product Lifecycles: With quickly changing consumer tastes and preferences, EMS companies and contract manufacturers need to have effective New Product Introduction (NPI) processes in place.
WHERE THE INDUSTRY IS GOING: INDUSTRY TARGETS
SHORT TERM (2016)
Investment: U$2.5 BExports: U$28 BEmployment: 506K (D)
3.5 M (I)
Total: 4 million workers
SHORT TERM (2016)
Investment: U$3 BExports: U$37 BEmployment: 1M (D)
7 M (I)
Total: 8 million workers
MEDIUM TERM (2022)
Investment: U$3 BExports: U$37 BEmployment: 1M (D)
7 M (I)
Total: 8 million workers
LONG TERM (2030)
Investment: U$5 BExports: U$52 BEmployment: 1.7M (D)
12 M (I)
Total: 14 million workers
MEDIUM TERM (2022)
Investment: U$5 BExports: U$52 BEmployment: 1.7M (D)
12 M (I)
Total: 14 million workers
LONG TERM (2030)
Investment: U$10 BExports: U$112 BEmployment: 3M (D)
21M (I)
Total: 24 million workers
Scenario A: Status Quo (just business as usual)
Scenario B: Optimum business conditions for industry, with government support and
academe partnership
WHERE THE INDUSTRY IS GOING: HOW TO GET THERE
DoSEMI (Drive-up our Semiconductor & Electronics Manufacturing Index)
WHERE THE INDUSTRY IS GOING: WHERE THE GOVERNMENT CAN HELP
SUPPORT NEEDED
DOE / ERC Electricity roadmap that would ensure lower power cost in the long run with right amount of supply.Promote use of renewable energy sources (such as solar)
DOLE Maintain peaceful and collaborative industrial relations with the labor sectorAvoid redundancy in requirements with other government agencies (e.g. annual mechanical and electrical permits similar to PEZA)
DOF / BIR Main incentives that have already been given to the industry Elimination of equipment donation taxes
TESDA Continuous scholarship grants for the industry’s operators and techniciansDevelopment of training regulations for different types of operators and technicians
BOC Elimination of unnecessary added fees such as barrier seals, computation on surety bonds, OT charges
DOT Promotion of the country as an investment site and for the quality of life. Include Philippine electronics pavilion when participating in trade fairs abroad.Green lane at the airport for very high executives corporate executives of electronics firms visiting the Philippines
DOJ Ensure peace and order and security of expatriates
WHERE THE INDUSTRY IS GOING: WHERE THE GOVERNMENT CAN HELP
SUPPORT NEEDED
DOST Partner with the industry for R&D lab developmentIntensive promotion of DOST-SEI scholarship so that more engineers can graduate with MS and PHDsContinuation of SETUP program for the development of Small Medium Enterprises (local suppliers)
DPWH Improve roads, ports, airports and mass transportation
CHED Update curriculum of Science and Technology coursesUpgrade the education system to cater to the requirements of the industry
DTI / PEZA A yearly target electronics investment roadshow especially in Korea and JapanWork on the Philippines becoming an ATA Carnet Signatory. This is an international customs and export-import document used to clear customs without paying duties and import taxes on merchandise that will be re-exported within 12 monthsFunding for industry players to join exhibits abroad and vice-versa
WHERE THE INDUSTRY IS GOING: ACADEME LINKAGE
Immerse students in electronics firms and allow them to be familiar with the electronics industryEnable graduating students to work in electronics firms (similar to a doctor’s residency) / OJTUpdate curriculum of Science and Technology courses to address industry needsPartner with TESDA in formulating training regulations for electronics skills and include it as part of K12Immerse faculty in industryCreate Regional Centers of Excellence Distance learningUpgrade international rankings of Philippine universities in Asia Participate in inter-school partnerships (Harvard, MIT, Stanford)
WHERE THE INDUSTRY IS GOING: R&D CAPABILITY
Design Center
Prototype Lab
Materials Lab
Incubation Facility
Scientists
Financing
Environment
INDUSTRY RECOMMENDATION:
TALENT DEVELOPMENT CONDUCIVE BUSINESS ENVIRONMENT
R&D CAPABILITY DEVELOPMENT
INDUSTRY / COUNTRY PROMOTION & LOCAL SME
DEVELOPMENT
Continuation ofscholarship program for operators and technicians
Logistics costs, power, wages, and incentives
Incubation labs, and more MS/PHDs
Aggressive investment mission abroad and funding capitalization for SMEs
END
THANK YOU AND GOD BLESS
Disclaimer: This study is for information only. It does not imply recommendation or endorsement by the BOI/DTI. Any views or
opinions presented in this study are solely representative of the industry associations involved and do not necessarily represent those
of the BOI/DTI. Use of any part or excerpts of this report should be with the permission of the author.