US Commerce Secretary Gina Raimondo on Tuesday, March 12, during a speech at a business forum in Manila, said that Washington wants to help the Philippines double its chip-making production capacity.
As part of the mentioned statement, it was separately noted that the United States, in the context of considering investing in the microcircuits manufacturing sector in an Asian country, is guided by the desire to reduce the level of geographical concentration of the global chip supply chain.
Gina Raimondo spoke at a business forum in Manila after led by her trade mission announced that American companies would send $1 billion in financing to implement projects in the Philippines. Commerce Secretary, whose activities in the area of international affairs in terms of goal-setting, including promoting Washington’s economic interests, are somewhat similar to the tasks of United States Secretary of State Antony Blinken, sought to encourage Southeast Asian countries to increase investment in chip production and segments of the industrial system associated with the mentioned sector.
Currently, the process of making microcircuits is concentrated in Taiwan, South Korea, and China. Commenting on this circumstance regarding the global allocation of production capacities, Gina Raimondo said that Washington realized the excessive concentration of the chip supply chain in only a few countries. Separately, she noted that the fact that the United States is paying attention to this specificity of the international allocation of manufacturing capacities should not be perceived in the context of geopolitical reality. Gina Raimondo underlined that in this case, Washington is guided by elementary logical conclusions that excessive concentration of something in one place can provoke potential risks. In the context of the supply chain, this assertion is expressed in the fact that several production centers reduce the degree of possible threat of disruption to the functioning of the process of shipments as a result of any problems in one of the regions where production activities are carried out. From this point of view, diversification is a logical and justified solution.
At the same time, it is worth noting that Gina Raimondo stated about the excessive concentration of chip production in several countries when the state of relations between Beijing and Washington is showing a rapid deterioration. The United States has restricted Chinese companies’ access to advanced microcircuits. Beijing has imposed constractions on exports of minerals needed for the semiconductor industry as part of its response measures. Against this background, there is obviously a need for diversification.
The administration of the current US President Joe Biden is seeking to reduce the country’s dependence on several Asian states for the supply of most of its chips. At the same time, Washington is imposing sanctions to curb the development of Beijing’s technological potential. The Joe Biden administration is strengthening appropriate measures at a time of rising tensions around Taiwan, which China perceives as its territory and declares relevant claims. Taiwan Semiconductor Manufacturing Co., the maker of the newest chips, is based on the self-governing island, which is one of the points of tenseness in the modern modification of geopolitical reality. Also in this production system, as above-mentioned, South Korea is an important player. Mainland China is a supplier of many more mature chips, sometimes referred to as legacy ones. Currently, Beijing is striving to improve its production capabilities.
Amid tensions between the United States and China, many makers of microcircuits and electronics have begun to consider diversification as part of independent solutions. In this case, North America and Southeast Asia may become potential production bases. Companies are seeking to diversify so that their activities do not end up in the area of sanctions by Washington and its allies, which, for example, joined the decision to limit the supply of advanced chips and equipment for the manufacturing of these products to China.
There are currently 13 semiconductor assembly, testing, and packaging plants in the Philippines. Gina Raimondo in Manila proposed to double the number of factories. At the same time, she did not provide any details about specific actions and decisions of Washington aimed at achieving the mentioned goal. Separately, Gina Raimondo said that the initiative to increase production capacity would be interesting for corporate clients from the United States.
The Philippines has the potential to become a significant global manufacturing base, as the country has a variety of essential minerals needed for relevant related activities. This was mentioned separately by Gina Raimondo. She also stated that local plants are striving to make their supply chain more sustainable internationally. According to her, a moment right now has already come in the context of solving corresponding tasks for the whole of Southeast Asia. This statement was made in the context of an appeal to Philippine executives.
