Semiconductor industry bracing for oil price shocks
Despite limited direct exposure to escalating tensions in Iran, Philippine semiconductor exporters are wary of rising oil prices, which threaten to increase operating costs of the energy-intensive chip industry.
Danilo Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi), said shipments to the Middle East remained “very minimal,” limiting the direct impact of regional instability on exports.
But companies are “at the edge of their seats” as a global oil supply crunch threatens to push up costs for fuel, transport and electricity, which are key inputs for semiconductor production.
On the sidelines of the Asean (Association of Southeast Asian Nations) Business Investment Forum., Lachica said (translated from Filipino): “So far, there’s no impact on the supply chain. But obviously, the cost of fuel, transportation and energy will eventually have an impact. Operational cost will increase, but the supply chains remain undisrupted.”
North America and Asia remain the largest markets for Philippine-made semiconductors, Lachica said. About 5 percent of shipments go to Germany and another 4 percent to the Netherlands.
Electronics exports— the bulk of which are semiconductors—reached $49.64 billion in 2025, up 16.11 percent from a year earlier and exceeding earlier forecasts of flat growth at $48 billion.
The sector’s performance came despite broader global trade uncertainty triggered by US tariffs, which ultimately spared semiconductors and most electronics exports from a 19-percent reciprocal levy imposed on Philippine goods.
Lachica also said a separate 25-percent tariff imposed by US President Donald Trump on artificial intelligence (AI) chips did not affect Philippine manufacturers, as local plants do not produce such advanced semiconductors.
Instead, companies in the Philippines manufacture peripheral components used in AI chip production, including power devices and controllers. These were also excluded from the US tariff.
Another challenge this year emerged after the Philippines had signed a critical minerals agreement with Washington, which unsettled some Chinese companies operating in the country.
“We had members that were impacted by that because they needed magnets from China,” the Seipi chief said. “They were shut down for a couple of weeks. It was their parent company that negotiated with their Chinese supplier to eventually ship some magnets to the Philippines.”
Despite the uncertainties, the industry group expects exports to grow by a “conservative” 5-percent in 2026. If achieved, Philippine electronics shipments would surpass $50 billion for the first time.
At the forum, Trade Secretary Cristina Roque said the government is launching an “Ascend” program for the semiconductor industry in partnership with the Asian Development Bank.
It aims to create investment pathways, promote research and development and “make the Asean a global hub for high-tech manufacturing.”
