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EXPANDING may be difficult, but they are definitely not
leaving.
This is the situation of electronics and
semiconductor makers in the country as they continue to
study how the global market will shape up while the
feared recession in the US unfolds.
Ernie Santiago, president of the
Semiconductor and Electronics Industry of the
Philippines Inc. (Seipi), said players in the industry
will certainly be exercising prudence in their expansion
plans this year due to the uncertainty of the market.
Semiconductor firms, a key plank of the exports sector,
have been among those hardest hit by the strengthening
of the peso against the dollar, and now the weakened
demand in major market the United States, whose economy
has been slowing down.
“We have to assess the market first and
get a clearer picture of what will happen because
companies do not want to have excess capacity when the
market suddenly becomes difficult. It does not make
sense,”
Santiago
told the BusinessMirror.
Still, Santiago gave assurances that the
predicament of giant chip maker Intel Corp., which
announced earlier it is studying further options amid
reports of the planned shutdown of its operations in
Cavite, is not shared by other companies here.
“It is not reflective of the industry,”
Santiago said.
Intel’s Cavite plant employs 3,000
workers, and their final fate remains unclear. A source
earlier told the BusinessMirror that high power costs
and the weakening US market were some of the reasons
cited for the “ramp-down” in Intel’s operations.
Actually, even if Intel itself does
decide to leave,
Santiago
said the company would still be maintaining its presence
here through the newly formed flash-memory maker Numonyx,
a partnership between Intel Corp. and STMicroelectronics
with global private-equity firm Francisco Partners.
He said Intel will be assigning some of
its operations here to Numonyx, which is now also
applying for Seipi membership.
Intel earlier disclosed that its
flash-memory factory in
Cavite
is among its contributions to the Numonyx partnership.
Representatives of the different
electronics and chip manufacturers in the country will
be meeting in Baguio City soon to look at the global
market situation and to also set strategies on “how we
can protect ourselves” from the slowdown in the US
market, according to Santiago.
He said the industry is aware that a
US
recession will definitely have effects in its other main
export destinations such as China, India and Europe.
Electronics and semiconductor companies
contribute about two-thirds of the Philippine
merchandise exports and their foreseen problematic
situation this year has already dampened the growth
prospects of the sector.
Santiago said the industry has set a
projection of flat growth in exports this year, although
shipments could go to the negative territory depending
on how deep the US recession will be and its subsequent
effects in the other markets.
Santiago said they will also know, from
the Baguio meeting, which companies will still pursue
expansion plans for the year.
Dallas-based chip maker Texas
Instruments is still bent on continuing with the
$1-billion expansion project in Clark, Pampanga, which
the company started last year, he said.
A company official earlier told the
BusinessMirror that Intel would transfer the
manufacturing of its central processing unit—a
computer’s brain—to its Shanghai, China hub. The
information bolsters speculation that the pullout might
not be limited just to the Cavite plant.
In an official statement, however, the
company said it wished to “reiterate that it has made no
decisions on this matter [its Philippine operations] and
is currently exploring multiple options.” It said it had
“updated” employees that “significant investments would
be required to ensure the long-term viability of its
factory building in Cavite,” a statement seen as
signaling a problematic situation in the Cavite plant.
The BusinessMirror source said,
meanwhile, “There’s still no announcement on what will
happen to the employees.”
Aside from China, Intel also has
manufacturing operations in
Malaysia
and Vietnam.
The announcement to employees of the
“ramp down” last week led to fears that the high-tech
company would totally dismantle its 32-year-old
operations in the Philippines.
Five years ago, Intel invested up to
$100 million more to upgrade its Cavite chip-assembly
plant, bringing its total investment in the Philippines
to $1.3 billion. It is the country’s largest exporter of
microchips and semi-conductors.
The source told the BusinessMirror,
however, “there’s still no official talks about that
[total pullout of Intel].” “I sincerely hope it doesn’t
get to that stage,” the source added.
An Intel study four years ago showed
that the company’s Philippine operations generated 0.3
percent of the country’s gross domestic product.
Intel’s General Trias, Cavite plant, its
main hub, reportedly accounted for 22 percent of all of
Cavite’s exports in 2004. The plant’s closure follows
Intel’s shutdown of its Makati City center last year,
purportedly to consolidate the company’s assembly and
test facility in Cavite. --With D. Estopace |
