MANILA, Philippines – The Biden administration is looking at the potential of its political allies like the Philippines to produce more semiconductors, as it continues to tighten knobs against China’s $190-billion chip industry.

“US companies have realized that our chip supply chain is way too concentrated in just a few countries in the world,” US Commerce Secretary Gina Raimondo told Philippine business leaders in a forum in Makati City, on Tuesday, March 12.

Raimondo, who is in Manila for a two-day trade and investment mission, underscored that the US will lend a hand to the Philippines to double its semiconductor assembly facilities.

Electronic products are the Philippines’ top exports in terms of value, posting total earnings of $3.45 billion in January, representing 58.2% of total exports during the month.

The world relies on Taiwan, South Korea, and China for chips. Semiconductors are the backbone of modern electronics used in a wide range of devices, including transistors, diodes, integrated circuits, solar cells, and more.

“Forget about geopolitics, just at that level of concentration, you know the old adage: ‘Don’t put all your eggs in one basket.’ Why do we allow ourselves to be buying so many of our chips from one or two countries?” Raimondo said.

She added that the Philippines is on “top of the list” of countries that could develop its semiconductors industry.

Raimondo’s investment mission is “historic” and the first of its kind for the Philippines.

“The message from us is: ‘We’re all in on the Philippines’,” she said.

Philippines’ potential

The Philippines is one of seven countries that the US has identified as partners to diversify its semiconductor supply chain.

Under the CHIPS and Science Act, some $52.7 billion is being used to lure chipmakers away from China, either back to the US or to allied countries, in the form of tax breaks and other incentives.

President Ferdinand Marcos Jr. said that the US legislation would result in the Philippines to churning out some 128,000 semiconductor engineers and technicians by 2028.

The US is the Philippines’ top export market.

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The US and its chips

US President Joe Biden has been making sweeping efforts to slow down China’s technological capabilities.

The US Commerce Department issued a broad set of prohibitions on exports to China of semiconductors and other tech amid military tensions and the boom of artificial intelligence.

This export ban, alongside incentives for US chip makers to relocate to countries that it deemed friendlier, has been viewed as Biden’s clear strategy of capping China’s potential in various technological developments, including surveillance and military capabilities.

Japan, along with the Netherlands, agreed to match US export controls that limit the sale of some chipmaking tools to China, and has placed restrictions on the export of 23 types of semiconductor manufacturing equipment to Beijing.

China said that the scheme “seriously violated” international economic and trade rules. – Rappler.com