'Scarcity of talent' seen in semicons

A “scarcity of talent” worries the country's semiconductor and electronics industry as the ASEAN single market starts this year.

Once in place, “we could lose our people,” said Dan Lachica, President of the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI), referring to engineers, doctorates and technical personnel who run the country's premier dollar-earning industry.

In a free market, Filipinos would find it more easy—and lucrative—to work in other Southeast Asian countries, many of them with bigger semiconductor and electronics industries.

“How do we replace these people?” asked Mr. Lachica. 

SEIPI is already concerned that the ASEAN Economic Community will open the market wide to competition. ASEAN stands for the Association of Southeast Asian Nations that groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

“It's hard enough for small and medium enterprises to get started and expand within one ASEAN economy,” Mr. Lachica stressed. “There's no way our SMEs can compete with big companies.”

What needs to be done is to accelerate the development of small and medium enterprises and localize the supply chain to increase local value content, he said. “Once they are qualified to supply multinational corporations, they will be able to export eventually.”

In spite of the decline in the percentage share in total exports, the electronics industry remains a significant contributor to the Philippine economy. According to SEIPI, semiconductor and electronics still has the highest percentage impact on the country’s Gross Domestic Product.

In December, SEIPI presented an upbeat year-end report: semicon and electronics still account for 40 percent of total exports as of October—$20.953 billion in electronics exports out of $51.769 billion total exports. 

Industry exports will grow between 5 percent to 8 percent this year, SEIPI said. Last year “ended with electronics exports of $21.82 billion, so an 8 percent growth for 2014 would mean ending the year with $23.6 billion,” Mr. Lachica said.

“This is already quite remarkable, albeit a single digit growth considering the obstacles that the industry and even other exporters faced such as port congestion and power issues.”

Last year, because of the port congestion, several companies had to shut down for several days and send their workers home due to the unavailability of raw materials.

While 90 percent of industry shipments are by air, both in and out of the country, 70 percent of semiconductors and 30 percent of electronics are shipped by sea, delaying inbound raw materials and outbound finished products.

The industry remains “heavily dependent” on imports, Lachica said. “Almost 70 percent of our materials are imported and are vulnerable to shipment delays.”

However, he pointed out, imports are already decreasing, meaning dependence on imported raw materials is lower while local value added is increasing.

“One of the challenges for semiconductor is that we want to move up to the higher value chain but this is impossible because of the cost of power,” he said, adding that the power component can be from single digit to as high as 40 percent in the country, the highest in Asia. 

“A clear direction and an assurance of power supply and quality are critical information especially for companies to decide on their expansion plans.” (SciencePhilippines)