Moody's: Philippines among Southeast Asia’s rising semiconductor hubs

‘Philippines among Southeast Asia’s rising semiconductor hubs’

Keisha Ta-Asan
Philstar Global
03 September 2025

MANILA, Philippines — The Philippines is emerging as one of Southeast Asia’s growing hubs for semiconductor assembly and testing, with the industry now accounting for about 32 percent of the country’s total goods exports in 2024, according to Moody’s Ratings.

In its latest sector review, Moody’s said the Philippines, alongside Malaysia and Vietnam, is playing a bigger role in the global chip supply chain as multinational firms diversify operations amid United States-China trade tensions and calls to strengthen supply chain resilience.

While Southeast Asia is gaining ground in back-end processing – particularly assembly, testing and packaging – Moody’s cautioned that economies like the Philippines face hurdles in moving up the value chain.

“Technical gaps constrain their ability to capture greater economic value,” the report said, pointing to weaknesses in research and development, talent and infrastructure.

According to Moody’s, Asia continues to dominate global semiconductor manufacturing, commanding more than 75 percent of overall chipmaking capacity, spanning advanced wafer fabrication, materials and assembly.

Despite US-led efforts to reshore production and the intensifying push for self-sufficiency in China, large-scale relocations of chipmaking out of Asia remain “commercially challenging” due to cost advantages and established ecosystems.

In the Philippines, semiconductors remain the backbone of electronics exports, supplying components used in consumer devices, automotive and industrial applications.

However, Moody’s warned that chronic issues such as power supply reliability, logistics bottleneck and limited investment could weigh on the country’s ability to attract higher-value operations in fabrication and design.

Still, the credit watcher said the region is on track to capture around 24 percent of global semiconductor back-end capacity by 2032, up from current levels. Malaysia leads the pack, but the Philippines and Vietnam are expected to expand their roles as cost-competitive alternatives for multinational players.

“Securing a competitive edge will hinge on workforce development, innovation and stronger public-private partnerships,” Moody’s said, adding that without such reforms, Southeast Asian economies risk remaining concentrated in low-margin, labor-intensive segments of the semiconductor chain.

ASEAN investment in the Philippines rises

PHL attracting more investments from ASEAN neighbors — BoI

Justine Irish D. Tabile, Reporter
BusinessWorld
03 September 2025

INVESTMENT PLEDGES from Association of Southeast Asian Nations (ASEAN) countries have reached P251.98 billion since 2020, reflecting the region’s increasing confidence in the Philippines, the Board of Investments (BoI) said.

“As we build stronger trade and investment ties with our ASEAN neighbors, these numbers reflect the growing confidence of foreign investors in the Philippines as a place for business growth,” Trade Secretary and BoI Chairperson Ma. Cristina A. Roque said in a statement on Tuesday.

“We will keep working to create a stable and welcoming business environment, one that brings in more investments and opens up real opportunities for Filipinos,” she added.

According to the BoI, Singapore has been the biggest source of investment pledges since 2020, accounting for P245.97 billion of the total. The other top sources were Thailand with P4.34 billion, Malaysia with P1.65 billion, and Indonesia with P12.27 million.

In terms of industries, around P170 billion of these investments went to the information and communication sector, while P74.2 billion went to the power sector.

“The BoI-approved projects from ASEAN investors, particularly those in the information and communication and the renewable energy sectors, align with the Philippines’ push for smart and sustainable manufacturing and services,” said BoI Executive Director Evariste M. Cagatan.

The other top sectors were manufacturing (P5.58 billion), administrative and support services (P1.41 billion), and agriculture, forestry, and fishing (P930 million).

“Collectively, these projects are projected to generate 15,358 new jobs for Filipinos from 2020 up to July 2025,” the BoI said.

Meanwhile, from January to July this year, total approved investment pledges from the ASEAN region reached P58.07 billion, according to the agency.

Citing a report from the Bangko Sentral ng Pilipinas, the BoI said there is also a sustained growth in foreign direct investment (FDI) inflows from Southeast Asian countries.

In the first seven months, net FDI from ASEAN reached $95.78 million, with investments from Singapore accounting for $63.61 million and Malaysia accounting for $31.56 million.

Moving forward, the BoI said the country’s participation in the ASEAN Investment Forum in Kuala Lumpur next month will help to further boost investments from the region.

The event is expected to showcase investment-ready projects under the ASEAN Regional Investment Promotion Action Plan 2025-2030 spanning biofuels, carbon capture and storage, medical devices, solar photovoltaic equipment, and regional supply linkages.

High production costs and labor shortages in their own countries are causing ASEAN economies to invest in the Philippines, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said the Philippines’ large and young population of over 114 million and leadership in the business process outsourcing sector also make it a viable market for ASEAN investors.

“The Philippines can also be an alternative, lower-cost destination for heavy industries such as shipbuilding, due to being cheaper and having a greater labor supply, such as engineers at a lower cost,” he said.

“It is also the 10th largest market in terms of sales for some of the world’s largest consumer goods companies, making it viable for production facilities, especially for perishable products.”

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the increasing investments from ASEAN countries reflect deepening regional integration and confidence in the Philippines as part of intra-ASEAN supply chains.

“The relocation of production capacities, regional hedging against global uncertainties, and proximity advantages are likely drivers,” he said in a Viber message.

The US is imposing sweeping tariffs on goods coming from its major trading partners, including the Philippines and other ASEAN member states.

Mr. Rivera said ongoing infrastructure development in the Philippines under the “Build Better More” program has also enhanced the country’s attractiveness to regional investors.

“Additionally, the Regional Comprehensive Economic Partnership and ASEAN-Australia-New Zealand Free Trade Area frameworks make it easier for ASEAN firms to view the Philippines as a strategic node for manufacturing, logistics, and services expansion,” he said.

“However, these may be negated by hounding corruption issues.”

Philippine economy now at a ‘sweet spot’ — BSP

Philippine economy now at a ‘sweet spot’ — BSP

BusinessWorld
02 September 2025

THE PHILIPPINE ECONOMY now sits at a “sweet spot” as inflation remains benign while the country’s banking sector and external position are strong, the Bangko Sentral ng Pilipinas (BSP) said.

“Amid the swirling controversies over corruption, I am pleased to report a piece of good news. We think the economy is in good shape,” BSP Governor Eli M. Remolona, Jr. said during a briefing at the Senate on Monday.

“Indeed, our economy is in what I would call a ‘sweet spot,’ and I think this would help our fiscal strategy (to) make it more effective,” he added.

For the first half, gross domestic product (GDP) growth averaged 5.4%, slower than the 6.2% a year ago.

Inflation averaged 1.7% in the January-July period, below the BSP’s 2-4% annual target.

Mr. Remolona said the central bank tamed inflation with its aggressive rate hikes.

Last week, it cut its key policy rate by 25 basis points (bps) to 5%. The central bank has so far lowered borrowing costs by a total of 150 bps since it began its easing cycle in August 2024.

“This lowering of the policy rate stimulates demand, it helps the economy grow, and because we did it in a very measured approach, it hasn’t led to inflation,” Mr. Remolona said.

He said inflation looks like it will stay within BSP’s 2-4% target range.

The BSP projected inflation to average 1.7% this year, before picking up to 3.3% in 2026 and 3.4% in 2027.

At the same time, Mr. Remolona also attributed the economy’s current state to the “sound” performance of the local banking system.

“The banks have solid balance sheets, assets are growing, deposits are growing, (and) income of banks is growing,” he said.

Mr. Remolona added that banks have maintained enough capital and liquidity.

“Looking at liquidity standards, international liquidity standards, our banks also hold liquidity that far exceeds the international standard,” he said. “At the same time, the loans are not so risky.”

Mr. Remolona also said digitalization and financial inclusion can help increase consumers’ savings, especially in a country where “savings rate tends to be quite low.”

Meanwhile, the BSP chief said the country has “more than enough” international reserves.

At end-July, the country’s gross international reserves slipped to $105.4 billion from $106 billion in June. — K.K.Chan

Philippines emerged as one of the top-performing nations at WorldSkills ASEAN Manila 2025

PH bags 10 golds in WorldSkills ASEAN tilt

Philippine News Agency
September 1, 2025

MANILA – The Philippines emerged as one of the top-performing nations at WorldSkills ASEAN Manila 2025, bagging 10 gold medals during the competition held Aug. 25 to 30 in Pasay City.

The gold medals were earned in 10 skill areas, including in three demonstration events Industrial Control, Carpentry, and Plumbing and Heating.

The gold medalists were Hannah Krystelle Caintic (Graphic Design Technology); Hayden Christian Gravador and Gian Benedict Cariño (Internet-of-Things); John Patrick Torres and Steven Retirado (CNC Maintenance); Agee Docayso (Cooking); Carlos Antonio Delos Reyes (Hotel Reception); James Cavin Sayago (Electrical Installations); Denmark Dadia (Refrigeration and Air Conditioning); James Bryan Estrada (Industrial Control); Honorato Amad II (Carpentry); and Alexis Joseph Anuta (Plumbing and Heating).

The last time the country won a gold medal was in Vietnam in 2004 in the Refrigeration and Air-Conditioning skill area.

In his speech during the closing ceremony, Technical Education and Skills Development Authority (TESDA) Secretary Kiko Benitez congratulated the competitors for their performance and reminded them about the competition’s significance.

“What we witnessed was bigger than medals. We saw not just skills, but discipline. Not just competition, but collaboration. Not just dreams, but the courage to make them real,” Benitez said, as quoted in a news release on Monday.

“We learned the lesson that excellence knows no borders. We gained confidence that ASEAN can stand shoulder to shoulder with the world. But above all, we took on a responsibility. A responsibility to keep investing in our youth, our workers, our communities.”

The biennial event, hosted this year by TESDA, brought together hundreds of young skilled professionals from 10 Southeast Asian member countries. They competed in 32 skill areas, celebrating technical expertise and innovation across the region.

The Philippines’ strong performance in this year’s competition reflects the nation’s growing investment in technical vocational education and training and its commitment to elevating skills standards to global levels.

Aside from gold medals, the Philippines also brought home seven silver and eight bronze medals, along with five Medallions for Excellence, which are awarded to competitors whose performance meets the rigorous international standards set by WorldSkills International.

Malaysia emerged as overall top performer with 13 gold medals, four silvers, three bronzes, and two Medallions for Excellence.

Indonesia produced nine golds, one silver, eight bronzes, and eight Medallions for Excellence.

The weeklong competition, held at the World Trade Center, Philippine Trade Training Center and SMX Convention Center, also featured industry-led exhibits, Try-a-Skill booths, and cultural performances, drawing thousands of students, educators, and industry partners to witness the transformative impact of skills development. (PR)