RP electronics companies seek higher value to stay competitive

Bluetooth devices, solar cells, close-circuit video systems, fully-automated semiconductor assembly lines: all are made and sometimes even designed in the Philippines, the region’s economic laggard.

The country’s electronics industry is pinning its hopes on such high-value innovations to stay ahead of emerging low-wage competitors like China to rise above its niche as a mere assembler for foreign firms.

"Definitely we can’t compete (with China) as far as labor costs, so as far as the company goes, we’d like to compete in terms of quality," said Edilberto Ocampo, general manager of the local unit of Japanese electronics giant Matsushita.

Matsushita, through its Panasonic arm, has been assembling CD-Roms, copiers, disc drives, cellphones, microphones and video equipment in its factories in the Philippines for years.

Where once it relied mostly on imported parts, Ocampo says his factory, located in a "technopark" just outside Manila, has been sourcing more components from local firms.

More and more high-end processes, like testing and customizing, are being done in the Philippines and just last year, the company began local development of a closed-circuit video system.

Electronic products, like semiconductors and consumer goods, have been a ray of light for the stormy Philippine economy, accounting for about 60 percent of the country’s exports.

But the industry wants to move up the technology ladder, not just put together imported raw materials for export, and is eager to compete with neighbors Singapore, Malaysia and Thailand in the electronics race.

The Philippines relies on a well-trained, highly-educated, English-speaking workforce to make the transition to producing more sophisticated products and, perhaps, even developing them as well.

Respected electronics industry analysts like the Gartner Research and the Meta Group, have ranked the Philippines highly as a source of skilled workers, often overtaking many industrialized countries.

One Meta Group study in 2000 even ranked the Philippines number one as a source of "knowledge workers" for the industry.

A showcase of local capabilities is the Philippine arm of US electronics giant, Cypress Semiconductor.

Cypress Manufacturing Ltd. Philippines has been operating "the most complete autoline" or automated assembly line for semiconductors in the world, says Jack Cena, the director of the operation.

Cypress officials in California decided to locate this "autoline" here because they were impressed by the quality of their local engineers, Cena recalls.

The favorable experience in the Philippines has led Cypress to locate the manufacturing facilities of a new subsidiary, Sunpower Manufacturing, here.

Sunpower will undertake the manufacture of solar cells in the Philippines next year, becoming Southeast Asia’s first large-scale solar cell producer, says Theresa Go, director of the project.

Another firm, Eazix Inc., is moving into designing high-tech products under the so-called "fabless business model" that is spreading in developed countries.

Luke Mendoza, Eazix’s head of software development, says it is concentrating on Wi-Fi, Bluetooth and Zigbee wireless applications, which promise to become industry standards.

"Admittedly, we’ve been lagging behind. Eazix is playing catch-up with the rest of the (developed) world," he says.

The company, a joint venture between Philippine assembler Integrated Microelectronics Inc. and Japan’s SiiX Corp., has already developed a "basic Bluetooth module" – the size of a fingernail, and sent a thousand units to the United States for a test run.

It has also developed "Chameleon," an electronic device already in use for tracking fleets of vehicles and securing buildings. – AFP