PHL semiconductor exports outlook grim for 2024 — SEIPI
PHILIPPINE exports of semiconductors and electronics are expected to decline this year amid soft demand, the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) said on Monday.
SEIPI President Danilo C. Lachica said that while there are positive indicators, projections suggest that the industry’s exports may still decrease compared to last year’s figures.
“We’re still on a 10% contraction projection, although there are signs of improvement… because if you project it throughout the year, if you linearize it, it’s at $45 billion, which is still lower than $46 billion in 2023,” he said at a forum.
He said that although some industry groups project double-digit growth, it will not be the same case for the Philippines due to its product mix.
“Because of our product mix in the Philippines compounded by the inventory correction, we’re even hoping we can just reach our 2023 levels, but conservatively, when we talk to our board members, the big multinationals, the projection is a 10% contraction,” he said.
Preliminary data from the Philippine Statistics Authority showed that electronics exports totaled $3.56 billion in May, representing a 5.1% decrease from the $3.75 billion seen in the same month last year.
This brought exports of electronic products in the first five months to $17.64 billion, up 12.7% from the $15.65 billion seen a year prior.
However, Mr. Lachica said that SEIPI’s board is due to revisit its industry projection by the fourth quarter.
“We will let you know if we see an upsurge, as we usually adjust (our projections) by the fourth quarter after the orders for the Christmas season come in. But right now, the demand is still soft,” he said.
According to Mr. Lachica, the demand for Philippine electronic products is still soft due to inventory correction and product mix.
“One of the major reasons is inventory correction, and we haven’t really completely dissipated the excess inventory last year,” he said.
“Next is the product mix; if you are supplying to Nvidia and Broadcom, you can expect double-digit growth, but because of what we have here, which resulted from the previous administration’s initiative to do incentives rationalization, we lost a lot of opportunities in terms of investment in new products,” he added.
Mr. Lachica said that the Philippines was not able to secure investments in new products, which is why the country was stuck with legacy products.
He added that the demand for the country’s electronic products could also be impacted by the Trump assassination attempt, but noted that the US is still a top electronics export destination.
“I don’t really see it having a major impact right now unless it worsens or escalates because the US is still a major export destination, accounting for around 10%,” he said.
“The problem is that we still do not have a trade agreement with them. And because there’s this trade agreement compliance, some of the products being made here have restrictions in the US. So, we’ve even actually lost some customers because we don’t have that,” he added.
However, besides the volatility in US elections, he said that the Philippines should be more concerned with what it is doing within its shores.
In particular, he said that SEIPI welcomes the government revisiting the Corporate Recovery and Tax Incentives for Enterprises Act to remove the value-added tax on constructive exports and restore the 5% gross income earnings and the autonomy of the Philippine Economic Zone Authority (PEZA).
Mr. Lachica said that restoring the autonomy of PEZA will help in investment promotions as it will not be “impeded” by the Fiscal Incentives Review Board. — Justine Irish D. Tabile