US ‘all in’ on Philippine chip sector as China tensions ramp up

U.S. Commerce Secretary Gina Raimondo also announced $1 billion in new American investment for the Philippines.
By Camille Elemia for Benar News
2024.03.12
US ‘all in’ on Philippine chip sector as China tensions ramp up U.S. Commerce Secretary Gina Raimondo (right) gestures beside Philippine Trade and Industry Secretary Alfredo Pascual during a news conference at Paranaque city, Philippines, March 11, 2024.during
[Aaron Favila/AP]

The United States is going “all in on the Philippines” and its semiconductor sector in a bid to diversify the global chip supply chain amid growing tensions with China, U.S. Commerce Secretary Gina Raimondo said Tuesday.

Raimondo made the announcement during a two-day trade mission to Manila in which she was joined by 22 American business executives from companies including Alphabet’s Google, Visa and Microsoft.

“This is historic. The message is: We are all in on the Philippines,” Raimondo said at a meeting with U.S. and Philippine business associations in Makati City, the city’s financial hub.

She also announced that American companies would invest $1 billion in the Philippines, spanning solar energy, electric vehicles and digitization.

The U.S. delegation, the first of its kind to the Southeast Asian nation, comes as the battle for semiconductor supremacy heats up between the world’s two largest economies.

Washington has stepped up sanctions to limit China’s access to the tiny electronic devices that power the modern economy, while encouraging American firms to diversify hi-tech supply chains.

“U.S. companies have realized that our chip supply chain is way too concentrated in just a few countries in the world. Forget about geopolitics; just add that level of concentration. It’s the old adage: ‘Don’t put your eggs in one basket’,” Raimondo said.

“The Philippines has 13 semiconductor assembly, testing, and packaging facilities. Let’s double it,” she added, without providing details on how that would be achieved.

Raimondo said the Philippines was rich in critical minerals, which “are more important than ever.”

“So as companies are thinking about how to make their supply chain more resilient, they are looking for countries in the world where they can establish an operation. I believe you are at the top of the list,” she said.

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Semiconductor chips are seen on a printed circuit board in this illustration picture taken Feb. 17, 2023. [Reuters]

Raimondo did not publicly refer directly to China by name during the Manila visit.

U.S. engagement with the Philippines has increased since President Ferdinand Marcos Jr. took office in June 2022, especially on security matters

At the same time, Washington has done more to cultivate economic ties with nations in the so-called Indo-Pacific region, which comprises 40% of the global economy, in a bid to counter China’s expanding influence. 

In May 2022, the U.S. launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with a focus on four pillars: Trade, supply chains, the clean economy and the fair economy, the latter of which covers tax and anti-corruption.

Aside from the U.S. and the Philippines, IPEF partners include Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam.

However, the initiative is not a traditional free-trade agreement and has faced criticism for not providing any market access.

On Monday, Raimondo met with Marcos at the Malacañang presidential palace in Manila before the president departed for a trip to Germany.

“Today’s gathering not only signifies a meeting of officials, but also celebrates the enduring relations between the Philippines and the United States – ties that have been built on shared sacrifices, mutual support and unwavering respect,” Marcos said.

In 2023, the U.S. ranked as the Philippines’ third biggest trading partner, its largest export market and fifth highest source of imports, according to data from the Philippine government. In the same period, total bilateral trade amounted to $19.96 billion, with exports valued at $11.54 billion and imports at $8.41 billion.

The Philippines’ top bilateral trade partner last year was China, with which it had a deficit of about $2 billion.

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U.S. Secretary of Commerce Gina Raimondo (center) speaks during a meeting with business executives at a hotel in Manila, March 12, 2024. [Ted Aljibe/AFP]

Most of the Raimondo-led trade delegation was from the technology, artificial intelligence, renewable energy and information and communications sectors. 

Tech giant Microsoft said Tuesday it would partner with the Philippines’ Technical Education and Skills Development Authority (TESDA) to train 100,000 Filipino women on AI and cybersecurity. 

Ted Osius, president and CEO of the non-profit US-ASEAN Business Council, said the U.S. commitments were good for the region.

“It’s in our national interest as well as in our economic interest to invest in the Philippines, to be involved in the Philippines, to support the Philippines’ growth and prosperity,” he told reporters after Raimondo’s address.

Resilient supply chains were important not just because of “challenges with China,” he said.

“We found during the COVID-19 pandemic that supply chains are more fragile than we expected. Even right now, there’s action in the Red Sea that is causing delays in shipping, causing delays in parts, needed parts, getting goods,” he said.

BenarNews is an RFA-affiliated online news organization.

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