Selloff of US hi-tech stocks to hit RP electronics sector

The local electronics industry will be adversely affected by the recent sell-off of high-tech stocks in the US following warnings from tech bellwethers Yahoo!, Intel and Cisco Systems that the weak US economy will cut into their business in the coming months.

Trade and Industry Secretary Manuel Roxas II said yesterday that the recent sell off of high-tech stocks in the US stock market "can be both good and bad news for the country."

"It is bad news because we are selling into that sector," he said. Electronic products continue to account for the bulk of the country’s export earnings.

"With the slowdown in the US IT sector, the country’s electronics export growth is not going to be as robust as originally projected," Roxas stressed.

Earlier, the Semiconductor and Electronics Industries in the Philippines projected that exports, particularly to the US, of semiconductor and electronic products will be flat this year.

The good news is that "these companies (US high-tech firms) will try to reengineer and restructure their operations" in light of the global slump in high-tech sector, Roxas said.

Roxas said the country would benefit as some of these companies may relocate in other countries to take advantage of cheap but highly-skilled labor force.

For one, Roxas said, the Japanese electronics giant Toshiba has decided to close its plant in the US and relocate to the Philippines.

"We have a situation where because of consolidation in operations, the Philippines benefit," Roxas said.

However, Roxas warned that competition to attract such investments is stiff among South American countries, the Carribean bloc and Mexico.