As electronics companies worldwide brace themselves for the expected slowdown in the US economy and the general softening of the electronics market, Intel joined one of the many companies searching for the cheapest and most efficient locations for their manufacturing facilities.
According to the Board of Investments (BOI), Intel had decided to shift its Latin American operation, specifically the manufacture of the Pentium 4, to its plant in General Trias, Cavite.
The decision, according to BOI managing head Vicente Perez, would consolidate Intel’s Pentium 4 production to its Cavite plant where the company already manufactures semiconductor and electronic components.
As the global electronics industry reached the downside of its cycle, electronic companies have adopted measures to bring down costs, initially by consolidating their manufacturing activities in countries where they could generate long-term cost efficiencies.
According to the Department of Trade and Industry (DTI), the slowdown in the US economy is not necessarily bad news for countries like the Philippines where companies could still get a competitive edge in terms of cost-effective and efficient manufacturing.
Although local export industries are expecting a contraction in the US market for various goods, specifically electronics, the DTI said companies in search of cost-effective manufacturing locations are definitely considering the Philippines as an alternative to traditional locations such as Latin America and even other parts of Asia.
Aside from Intel, Toshiba had earlier consolidated some of its manufacturing plants to its facilities here in the Philippines where it is deemed relatively cheaper in terms of skilled labor costs.
Although there could be a short-term contraction in Philippine exports, there are long-term benefits to be had since the manufacturing capacities of existing plants would expand while generating more employment and ultimately increasing output to export markets.
Last year, Intel had been forced to shut down two of its manufacturing lines due to the suspension of flights between Taiwan and the Philippines. The company has since resumed normal operations and the impending expansion of its facility with the addition of the Pentium 4 demand from its Latin American operations would be a boost to the country’s electronics exports.
Intel is a registered beneficiary of various government incentives being administered by the BOI. It is entitled to such perks as income tax holiday, duty-free importation of capital equipment and various tax credits under the Omnibus Investments Act.