Christy Balita
Research expert covering the Philippines
Electronics manufacturing sector in the Philippines - statistics & facts
The electronics manufacturing industry is among the most significant contributors to the manufacturing output in the Philippines. With a focus on the sub-assembly of various electronic components, the sector accounts for the largest share of commodity exports from the Philippines, equivalent to about 60 percent. While it may not be the leading industry when it comes to GDP contribution, primarily due to production costs, electrical equipment manufacturing still generated over 50 billion Philippine pesos in gross value added in 2022.
The major products within the electronics manufacturing industry are semiconductors and electronic data processing products such as hard disk drives. In 2022, semiconductors accounted for the highest share of the total electronic products exported from the Philippines. They were primarily exported to China, Hong Kong, and Singapore. Also known as integrated circuits and microchips, semiconductors are used in many electrical appliances and consumer electronics such as smartphones and televisions. To produce semiconductors, the Philippines also imports electronic goods such as wafers from China, Korea, and Taiwan, among others. In addition, the sector also produces final products and product-specific parts in the consumer electronics, medical devices, office equipment, and automotive electronics sectors.
Electronics industry landscape
The electronics industry in the Philippines comprises semiconductor manufacturing services (SMS), 73 percent of the market, and electronics manufacturing services (EMS). The industry is focused primarily on the assembly, testing, packaging, and distribution of various electronic goods. In earlier years, it was dominated by international manufacturers that had moved their operations to the Philippines because of cheaper labor and lower production costs. Today, nearly 600 establishments in the sector are found within the Philippine Economic Zone Authority (PEZA) locations.The major products within the electronics manufacturing industry are semiconductors and electronic data processing products such as hard disk drives. In 2022, semiconductors accounted for the highest share of the total electronic products exported from the Philippines. They were primarily exported to China, Hong Kong, and Singapore. Also known as integrated circuits and microchips, semiconductors are used in many electrical appliances and consumer electronics such as smartphones and televisions. To produce semiconductors, the Philippines also imports electronic goods such as wafers from China, Korea, and Taiwan, among others. In addition, the sector also produces final products and product-specific parts in the consumer electronics, medical devices, office equipment, and automotive electronics sectors.
Industry challenges and tax incentives for investors
Surging demand for electronic devices in recent years and growing interest in emerging technologies such as artificial intelligence have contributed to the rapid growth of the electronics industry. However, the uncertainties caused by the COVID-19 pandemic resulted in a slowdown in equipment production, translating to reduced output for semiconductors. To help the industry recover and attract more foreign investments, the government passed the Corporate Recovery and Tax Incentives for Enterprises Act (also known as CREATE Law) in March 2021, which provides better tax incentives to investors. In 2021, the Philippines received about 10.52 billion U.S. dollars of foreign direct investments. The value of approved investments in the manufacturing industry was twice as much as in the current year. The sector is looking to increase foreign investments further and is venturing into manufacturing medical devices and automotive electronics.
