Intel dumps wafer plant project in RP

Intel Corp. has virtually ruled out the possibility of investing on a wafer fabrication plant in the Philippines, while government itself may lose its interest in attracting wafer fabricators due to the size of investments that it will have to make on top of various incentives being offered.

In an attempt to attract a $2-billion wafer fabrication project, the Estrada administration is batting for the amendment of the Omnibus Investment Code to be able to offer a 12-year income tax holiday for all big-ticket pioneering, export-oriented foreign enterprises.

Tailor-made for wafer fabrication, the proposed 12-year tax holiday is contained in a priority bill that seeks to amend Executive Order 226 and align the country's available incentives with its neighboring countries such as Taiwan and Singapore which already host several wafer fabrication plants.

According to Trade and Industry Secretary Manuel Roxas II, however, even a 12-year income tax holiday will not be enough to entice wafer fabricators unless these companies are willing to put up the supporting infrastructure that the plant will require.

Roxas said he has had informal meetings with Intel representatives who brought him up to date with what a wafer fabrication plant would require from government in terms of incentives and infrastructure.

The wafer is the major component in an integrated circut, a thin slice of silicon ingot on which semiconductor devices such as transistors, capacitors, resistors and the like are simultaneously fabricated.

Roxas said that based on initial cost-benefit studies, every unit of investment made by a wafer fabricator would require 8 to 12 units of investment by government in terms of surrounding infrastructure.

The Board of Investments (BOI) had indicated that wafer fabrication plants require infrastructure and facilities unique to the manufacturing process involved such as ample supply of de-ionized water which is 2,000 times cleaner than tap water, in amounts equivalent to 24 swimming pools at 36,000 cubic meters of water per hour daily.

The plant will also require enough compressed air that can fill an equivalent of 3,000 party balloons, also on a daily basis and enough cooling capacity and electricity equivalent to the requirement of about 3,000 homes.

Another critical requirement is a hazardous waste management facility which government will have to provide unless the company is willing to put this up itself. In countries like Singapore and Taiwan, facilities like these have been provided by government.

"If we want to dream, we can dream. So if a company wants to come in, put up the plant and the supporting infrastructure, why not?" Roxas pointed out. "But the truth of the matter is that government does not have the resources to make this kind of investment and if I were the company, why would I come here where I have to start from scratch, instead of some other country where everything is alreadyi n place."

Roxas said the country was in a better position to attract intermediate technologies as a logical development direction for its existing electronics industry. "We are taking our data appart in order to anticipate where the growth areas are," he said. "This industry developes so fast and the rate of obsolesence is very high. The numbers we have now will be gone by tomorrow."