THE Semiconductor and Electronics Industries in the Philippines, Foundation Inc. (SEIPI) has revised its growth target for electronics exports from 5 percent to zero percent for 2023 due to the ongoing geopolitical conflicts such as the trade war between the United States and China.
“So as of June we’re 7 percent down and we have, however, revised our growth forecast from 5 percent for the year to flat, zero, because realistically we’re down 7 percent,” SEIPI President Danilo C. Lachica told reporters on the sidelines of the Knowledge Exchange Forum: Competency Standards Development for Industries and Learners, organized by the Philippine Business for Education (PBEd) on Wednesday held in Makati City. But, the SEIPI chief said, “We see a recovery in the third and fourth quarter. So that’s why we are aiming for at least flat.”
Lachica still pointed to the geopolitical conflicts such as the US trade war as the reason behind the decline in electronics exports in the first half of the year.
Citing data from the Philippine Statistics Authority (PSA), SEIPI said electronics exports covering the period of January to June 2023 went down by 6.99 percent from US$22.78 billion in 2022 to US$21.19 billion in 2023.
This is equivalent to 60.63 percent of the Philippine exports pie.
Notwithstanding the decline experienced by the industry in the first half of the year, Lachica expressed optimism as he is banking on the last quarter of the year’s festivities to drive the growth of the industry.
“The demand is still there. And so we’re hoping that the thanksgiving demand, the Christmas demand, will propel the recovery of the industry,” the SEIPI chief stressed.
Moving forward, Lachica divulged the overseas markets that will help drive the growth for the remainder of the year, highlighting that most of SEIPI’s exports go to Asia.
In particular, he said, “China and Hong Kong, but Hong Kong is a clearing house. It goes to Europe, and then the next strongest market would be at about 12 percent that would be for the USA, and Japan and Singapore.” Meanwhile, United Kingdom-based think tank Oxford Economics noted last August 25 that “demand for Asian goods will see some further weakness in the coming months.”
“And while one piece of better news is that the global semiconductor cycle has turned, the tailwind from its initial recovery is likely to be mild,” the UK-based think tank noted. Lachica said there has been an “interesting reversal” in Europe. He said Germany used to be the highest destination of exports within the European Union and then Netherlands.
Now, he said, the destination with the biggest amount of exports in Europe is the Netherlands followed by Germany.
In May 2023, SEIPI kept its 5-percent growth target for 2023 despite the 15.29-percent decline in electronics exports in the first quarter of 2023.
In March, SEIPI revealed that it recorded US$49.09 billion in 2022, a 6.88-percent annual growth from the US$45.93 billion recorded in 2021.