The Philippines could be the home of the ‘Silicon Valley of Asia’ through the Pax Silica Initiative, a partnership that could lead to long-term economic gains—and also long-term consequences.
Written by Henrik Batallones
As this issue went to press, the participation of the Philippines in the Pax Silica Initiative has captured the attention of the wider public. President Ferdinand Marcos Jr. portrayed it as a key driver for putting the country at the heart of global value chains, particularly in advanced manufacturing. However, opposition is mounting amidst concerns over its impact on the environment and local communities, as well as jurisdictional and sovereignty issues.
With our participation—and particularly our commitment to being home to the first Pax Silica industrial hub—set to be affirmed in November, questions are now being raised as to whether the purported benefits will be worth the supposed consequences. But at its heart, the Pax Silica Initiative is just part of a complicated web of industrialization strategies, geopolitical considerations and the interests and priorities of various stakeholders, both here in the Philippines and across global value chains.
Our current state
The Philippines has long been home to a competitive semiconductor and electronics industry, starting from the 1970s, when multinational companies established assembly plants in the country. Buoyed by a competent, English-speaking workforce, the industry has become critical in providing various components for everything from computers and mobile devices to automotives and appliances.
According to the Semiconductor and Electronics Industry of the Philippines Foundation (SEIPI), total electronics exports reached USD 49.64 billion in 2025, accounting for over 58% of the country’s total exports. This was 16% heigher than the industry’s total exports in 2024. Most of these components were sent to Hong Kong, the United States, China, Japan and Singapore.
That said, the Philippines’ contribution to the global electronics industry is small. Data from the International Trade Centre in 2025 shows China leading in total electronics exports, valued at USD 972.4 billion; they aere followed by Hong Kong, Taiwan, Vietnam and the United States. Among ASEAN countries, Vietnam is followed by Singapore, Malaysia and Thailand, and then the Philippines.
Many factors have affected the growth of our domestic electronics sector. Apart from high utility and logistics costs, high regulatory burdens and an emerging gap among new entries to the labor force, the local industry has mostly failed to move beyond traditional assembly, testing, and packaging of chips, as opposed to putting together components for new and emerging technologies.
In addition, the country has not developed the capabilities for wafer fabrication, the process of creating integrated circuits, more commonly known as microchips—the very chips that power virtually all devices and equipment that we use today. SEIPI president Dan Lachica described this as the “big gap” in our industry, and has made our industry a small player in global value chains.
Shifts in global value chains
In recent years, global superpowers have begun treating matters involving supply chains in electronics, critical minerals and other computing infrastructure as national security concerns. In particular, the United States has sought to counter the increasing dominance of China in the global electronics sphere. In particular, Taiwan—which China considers as part of its territory—is home to many major manufacturers that provide chips to American companies such as Apple and Nvidia.
In 2022, then US president Joe Biden signed into law the CHIPS and Science Act, which aims to boost domestic semiconductor manufacturing capabilities in the United States. However, the projects that came out of this law have been hobbled by subsequent budget cuts, particularly after the return of Donald Trump as president, as well as a shortage in skilled workers.
Nevertheless, the second Trump administration made supply chain resilience a key touchpoint of its national security strategy. In December 2025, it launched the Pax Silica Initiative, intended to foster stronger cooperation among countries on matters including semiconductor manufacturing, mineral refining and processing, logistics and energy. Seven countries initially signed into the deal: Australia, Israel, Japan, South Korea, Singapore, the United Kingdom and the United States.
In the next few months many other countries signed up, including Germany, India, Qatar, Sweden and the United Arab Emirates, as well as the European Union. The Philippines signed the declaration in April 2026, and was later announced as the home of a 1,619-hectare industrial zone within the New Clark City development. It has been described by the US Embassy as the “first AI-native industrial acceleration hub” under the partnership.
It’s very likely New Clark City is selected due to it being part of the Luzon Economic Corridor, another international economic partnership forged in 2024. Founded by the United States, Japan and the Philippines, it later attracted involvement from Australia, South Korea and Sweden. It aims to connect the ports of Subic, Manila and Batangas, as well as Clark airport—primarily through a cargo rail link, for which feasibility studies are now ongoing—to grow the region’s manufacturing base and strengthen supply chain resilience.
While the Pax Silica Initiative figures in the Philippines’ ambitions to improve its positions in global value chains, in this instance it sits firmly within the broader Luzon Economic Corridor plans. The LEC, for one, also covers expansion of shipbuilding and aerospace manufacturing capacity in other parts of the country, as well as fuel depots and nuclear energy generation.
Positives and negatives
In his State of the Nation Address, President Marcos said membership would “bring quality jobs to our people, accelerate our industrial competitiveness and revitalize our economy.”
Estimates on the number of jobs vary wildly, with the Bases Conversion and Development Authority estimating up to 990,000 jobs will be created—although only 130,000 to 190,000 will be direct jobs, with the rest coming from allied sectors such as services, construction and logistics.
The logistics sector will definitely see a boost once the Pax Silica hub goes online, through added business from new locators. While stakeholders have kept quiet on which companies may establish facilities, finance secretary Frederick Go had previously divulged that negotiations are ongoing with Foxconn, the world’s largest electronics manufacturer, responsible for putting together consumer electronics as well as AI and cloud computing infrastructure.
In addition, the expected expansion of physical and digital infrastructure surrounding the industrial hub could improve connectivity to and from New Clark City, and boost the competitiveness of the region. The last few years have illustrated how new expressways such as the Tarlac-Pangasinan-La Union Expressway have made nearby towns appealing locations for logistics hubs and distribution centers serving customers in northern Luzon.
However, critics have raised concerns about the impact of the proposed development on the environment as well as local communities. Many have flagged its possible impact on the availability and quality of potable water in nearby communities, citing stories of how the construction of data centers in towns across the globe have led to water shortages. This argument has resonated particularly as the country finds itself in the midst of a “super” El Niño, and the resulting drought.
Some have also raised the impact on electricity supplies. Already limited and expensive electricity is why our existing semiconductor industry has not developed as much as it should: building new facilities may not immediately address concerns over supplies and cost. Energy secretary Sharon Garin had gone as far as suggesting the Pax Silica hub should be powered by a new nuclear energy facility, as it would provide consistent and cheap electricity.
Others have noted the displacement of indigenous communities around the New Clark City area, while even others have argued that any land allocated for the hub should instead be devoted to agriculture, noting the sector’s ongoing struggles and the Philippines’ food security issues.
While these concerns are valid and should be discussed more broadly, it’s worth noting that the lack of concrete details surrounding our participation in the Pax Silica Initiative—and the relative silence from government on this—fuels speculation that cannot be easily addressed. For one, while the hub is illustrated as “AI-native” there is little to suggest that it will only be home to data centers to power the growing use of AI applications. The existing semiconductor industry already uses water extensively, but few concerns have been raised about it over the years—and the government has promised that such concerns will be addressed.
It may also be down to whether the government can be trusted with delivering fully on concerns surrounding resource use and whether it can accommodate the needs of those who will be displaced by the development.
Be forthright
That said, it’s also worth noting that the construction of new manufacturing facilities do not necessarily address the issues long cited as the reasons for our electronics sector’s doldrums. Will the hundreds of thousands of jobs promised be easily filled by competent Filipinos? It’s not enough that we can speak English fairly well: the need for up-to-date technical knowledge will have to be addressed even before a single facility opens. At worst, we will have facilities that are staffed entirely by foreigners, with Filipinos limited to indirect economic gains that do not necessarily empower them to move up the ladder, and can even result in social injustice and inequality.
Another concern revolves around the jurisdiction of the industrial hub. The United States initially wanted the facility to be outside of Philippine laws and jurisdiction, something that our government quickly shot down. Considering the heavy-handed tendencies of the Trump administration to assert control, it’s safe to say they will try to push for it again.
Some critics also fear that our participation in Pax Silica would expose us to geopolitical conflict, especially considering China’s territorial ambitions already affecting our western shores, and potentially threatening major shipping lanes serving Manila, Subic and Batangas. The Luzon Economic Corridor plans do not exactly conceal its plans to build facilities that can conceivably support military needs, not to mention the direction of travel towards electronic supply chains as a security imperative for global superpowers.
There are also valid concerns that the Philippines may not realize Pax Silica’s promises of industrialization, and only ends up being a source of the critical minerals seen as key to the west’s continued economic dominance.
The Pax Silica Initiative offers both long-term benefits and consequences to the Philippines, but it would be foolish for a country like ours to not, at least, weigh what it can offer. The government clearly sees this as a way to attract foreign direct investment and accelerate infrastructure development, but it has to be forthright in tackling concerns raised by the partnership’s critics. More importantly, if we are to have a shot at being a key part of the global electronics value chain, we have to address long-standing issues on the capability of our workforce, the cost of doing business, and removing barriers to trade and connectivity. This initiative cannot be the silver bullet. Any partnership should be truly equal, and not just benefit those at the top of the chain.