PhilippinesHow policy choices left Philippines behind Taiwan in global chip race
Policy choices have led to the Philippines lagging behind Taiwan in the global chip race, with UP researchers suggesting that foreign factories alone are insufficient for Pax Silica's needs.
Foreign chip plants cannot substitute for local innovation
Hosting foreign assembly plants without developing domestic intellectual property and research capabilities keeps regional economies stuck at the lower end of the technology value chain. Historical policy choices in the Philippines focused heavily on attracting foreign factories rather than building indigenous design expertise and supplier ecosystems. Relying strictly on foreign assembly outposts limits long term industrial competitiveness.
Executing a catch-up strategy requires policymakers to move from passive tax incentives to direct co-investment in domestic research initiatives and technical education. What usually goes wrong is treating semiconductor strategy as a real estate and labor play rather than a sustained industrial commitment. Watch for whether Manila establishes dedicated funding mechanisms for university research partnerships and local suppliers.
For investment committees, allocating capital to low-cost assembly hubs offers shrinking returns unless backed by deep local engineering talent and proprietary technology development.