||21 Oct 2007
|Opportunity in Business: ELECTRONICS
|The Philippine electronics industry began in the mid-seventies when industrialized nations relocated their production facilities to third world countries in order to control the escalating cost of production. The Philippines was an ideal relocation site due to its cost competitive, highly-educated and English-speaking labor. Other factors included the country's geographical location (being at the crossroads of international trade), and attractive government incentives. The conditions that encouraged foreign electronics companies to turn to the Philippines have remained and have been further enhanced by the country's political transition to popular democracy in 1986. Since then, the industry has grown rapidly and overtook agriculture as the leading export earning industry in 1996.
Source: Department of Trade and Industry
|Opportunity in Business - Sectoral Profiles Revenue Streams - Electronics Industry|
The Philippine electronics industry began in the mid-seventies when industrialized nations relocated their production facilities to third world countries in order to control the escalating cost of production. The Philippines was an ideal relocation site due to its cost competitive, highly-educated and English-speaking labor. Other factors included the country's geographical location (being at the crossroads of international trade), and attractive government incentives. The conditions that encouraged foreign electronics companies to turn to the Philippines have remained and have been further enhanced by the country's political transition to popular democracy in 1986. Since then, the industry has grown rapidly and overtook agriculture as the leading export earning industry in 1996.
| The electronics industry accounts for 69% of the total Philippine exports. In 2001 alone, the industry clocked a total of US$ 24 billion in export revenues. On the average, total electronic exports increased annually by 21% from 1996 to 2000.In 2001, exports slowed down due to inventory build-up and weak semiconductor and electronics demand. The year 2002, however, saw a strong recovery with more than 9% growth over the 2001 level of US$ 21.62 billion.Philippine Electronics CoverageThe Philippine electronics industry covers the following sub-sectors:Semiconductors (microelectronics) and other components |
Electronic Data Processing (EDP) Equipment
- Biggest subsector of the industry
- Consists of manufacturers of integrated ciruits (ICs), transistors, diodes, resistors, capacitors, coils, transformers, PCBs and other components.
- Major players include the Philippine subsidiaries of Intel, Texas Instruments, Philips, Amkor, Fairchild Semiconductors, etc.
- Consists of manufacturers of computers, peripheral storage and input/output devices.
- Products include laptops, desktop PCs, printers, computer monitors, drives: hard disk, optical, ZIP, CD-ROM.
- Major players include Toshiba, Acer, Epson, Fujitsu, Ionics, Sampo Technology.
- Includes manufacturers of photocopiers, fax machines, and electronic calculators.
- Companies: Matsushita Business Machines, Sharp and Seiyo Electronics
Communications and Radar
- Products: telephone sets, modems, copper communication cables, and fiber optic cables.
- Players include ETSI Technologies, Eupen Cable; and NEC Technologies.
Control and Instrumentation
- Products: cellular phones, pagers, closed circuit television (CCTV), CB transceivers, radar detectors, marine and land mobile radios
- Leading players include Matsushita Communication, Uniden, Casio and Euro CB.
Medical and Industrial
- Refers to test and measuring instruments such as oscilloscopes, signal generators, ammeters, voltmeters, ohmmeters, cross talk meters, etc.
- Philippine-based companies includes manufacturers of PCB assemblies for instrumentation / testing equipment, digital thermometers, microscope of PCB assemblies for instrumentation / testing equipment, digital thermometers, microscope, automotive test equipment and multitesters.
- Players include Precision Microcircuits, Sara Digital Network, Phil Makoto Corp., and Insung Phils. Electronics.
- Covers equipment used for X-ray and other medical applications, railway signaling, security and fire alarms.
- Philippine-based companies are involved in the production of spiro analyzers and smoke detectors.
- One of the leading players is P. Imes Corporation.
- Comprised mainly of manufacturers of car stereos, anti-skid brake systems (ABS), and car body electronics (CBE)
- Major players include Temic Automotive, Fujitsu Ten, Muramoto Audio-Visuals Phils., and Clarion Mfg.
- Products: TV sets, VCD players, electronic games, radio cassette players and karaoke machines.
- Major players include Matsushita Electric (Panasonic), Sony, Sharp, LG-Collins and JVC.
- US$ 24 billion
- 69% of total Philippine exports
- Top export markets: United States, Japan, Netherlands, Singapore and Taiwan
Characteristics of the industry :
Characteristics of a typical electronics company :
- Dominated by multinational firms
715 electronic firms
72% of which are foreign owned and 28% are locally owned
- Engaged in assembly and test manufacturing activities
- High quality and productivity
- Growing base of components supplier
- Practices the best known methods in manufacturing (JIT, TQM, 5S, QPIC)
- Capabilities range from IC packaging, PCB assembly, full product assembly
- Has in-house training capability
- Runs at three shifts a day
- Provides better compensation package compared to other industries
- Non-unionized with low turnover
- Operates with clean rooms and fully integrated manufacturing facilities
- 335,000 workers as of 2002
Global Market TrendsSemiconductors & other components
- Available labor force of 32 million
- Over 100,000 engineering, IT and technical graduates every year
- Trainable and technically capable:
Needs only 6-8 weeks to learn technical skills
Familiarity with quality programs
- Cost competitiveness in terms of compensation
Production manager US$ 1,000-1,500 / month
Production supervisor US$ 450 -700 / month
Production operator US$ 6-7 / day
- Flexible: multi-skilled and English-speaking
- According to the Semiconductor Industry Association, the leading voice of the semiconductor industry in the United States, global chip sales are expected to rise by 6.3% as Asian chip sales are forecasted to increase by 45% upon the opening of new markets in China
- The world market for semiconductors will grow from US$ 141 billion in 2001 to US$ 218 billion in 2004.
- According to Morgan Stanley, the IC market in China will grow by nearly 30% a year during the next four to five years, driven by demand for PCs and mobile communications. However, they estimate that domestic production would only be able to meet 15% of that demand.
Digital Consumer Electronics
- The worldwide market for PCs is expected to turn positive in Q3. Increased business capital spending for leading-edge computers and networking equipment is going to lead to a semiconductor upturn in mid-2002 with an expected 12% increase in 2003. (Dataquest)
- From 130 million PCs in 2000 to 213 million PCs in 2005
- Consumer electronics is a potential growth market this year as digital applications continue to drive the consumer market with analog-to-digital conversion, 2.5G cell phones, digital cameras and digital TV with an expected 15% growth in 2003. (Dataquest)
- Sales in cellular units are expected to increase by 18% in 2003 as positive / recovery signs from the cell phone market are foreseen during Q2 of 2002. (Dataquest)
- The handset market is projected to grow from 400 million handsets in 2000 to one billion handsets by 2004
- Demand for mobile phone handsets is recovering so fast that manufacturers are being hit by a temporary shortage of some parts. Demand is being led by Asia, particularly the largely untapped Chinese market, but there is growth too in both Europe and United States.
Smart Handheld Devices
- Sales of Itanium-based servers will reach 26,000 units in 2001 and is expected to increase to 540,000 units over the next three years.
- The worldwide smart handheld market will increase from US$ 8.2 billion in 2000 to US$ 26.6 billion in 2004.
Optical Networking Equipment
- The market for optical networking equipment is projected to grow from US$ 31 billion in 2000 to US$ 93 billion by 2003.
Cable Modems and Digital Subscriber Line (DSL)
- The market for semiconductors for cable and DSL is expected to grow from US$ 2 billion to more than US$ 3.8 billion in 2003.
|By: PhilCTTIS Data Center