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                                                         Philippine Electronics Coverage

                                                         Exports (2002)

                                                         Electronics Profile

                                                         Global Market Trends

The electronics industry accounts for 69% of the total Philippine exports. In 2001
alone, the industry clocked a total of US$24 billion in export revenues. On the
average, total electronic exports increased annually by 21% from 1996 to 2000.

In 2001, exports slowed down due to inventory build-up and weak semiconductor
and electronics demand. The year 2002, however, saw a strong recovery with
more than 9% growth over the 2001 level of US$21.62 billion.

Philippine Electronics Coverage
The Philippine electronics industry covers the following sub -sectors:

Semiconductors (microelectronics) and other components

      Biggest subsector of the industry
      Consists of manufacturers of integrated circuits (ICs), transistors, diodes,
       resistors, capacitors, coils, transformers, PCBs and other components.
      Major players include the Philippine subsidiaries of Intel, Texas
       Instruments, Philips, Amkor, Fairchild Semicond uctors, etc.

Electronic Data Processing (EDP) Equipment

      Consists of manufacturers of computers, peripheral storage and
       input/output devices.
      Products include laptops, desktop PCs, printers, computer monitors,
       drives: hard disk, optical, ZIP, CD-ROM.
      Major players include Toshiba, Acer, Epson, Fujitsu, Ionics, Sampo

Office Equipment

      Includes manufacturers of photocopiers, fax machines, and electronic
      Companies: Matsushita Business Machines, Sharp and Seiyo Electronics
Telecommunication Equipment

      Products: telephone sets, modems, copper communication cables, and
       fiber optic cables.
      Players include ETSI Technologies, Eupen Cable; and NEC Technologies.

Communications and Radar

      Products: cellular phones, pagers, closed circuit television (CCTV), CB
       transceivers, radar detectors, marine and land mobile radios
      Leading players include Matsushita Communication, Uniden, Casio and
       Euro CB.

Control and Instrumentation

      Refers to test and measuring instruments such as oscilloscopes, signal
       generators, ammeters, voltmeters, ohmmeters, cross talk meters, etc.
      Philippine-based companies includes manufacturers of PCB assemblies
       for instrumentation / testing equipment, digital thermometers, microscope
       of PCB assemblies for instrumentation / testing equipment, digital
       thermometers, microscope, automotive test equipment and multi-testers.
      Players include Precision Microcircuits, Sara Digital Network, Phil Makoto
       Corp., and Insung Phils. Electronics.

Medical and Industrial

      Covers equipment used for X-ray and other medical applications, railway
       signaling, security and fire alarms.
      Philippine-based companies are involved in the production of spiro
       analyzers and smoke detectors.
      One of the leading players is P. Imes Corporation.

Automotive Electronics

      Comprised mainly of manufacturers of car stereos, anti-skid brake
       systems (ABS), and car body electronics (CBE)
      Major players include Temic Automotive, Fujitsu Ten, Muramoto Audio-
       Visuals Phils., and Clarion Mfg.

Consumers Electronics

      Products: TV sets, VCD players, electronic games, radio cassette players
       and karaoke machines.
      Major players include Matsushita Electric (Panasonic), Sony, Sharp, LG-
       Collins and JVC.
Exports (2001)
Total Electronics

      US$ 24 billion
      69% of total Philippine exports
      Top export markets: United States, Japan, Netherlands, Singapore and

       Summary of Philippine Merchandise Exports by Major Product Grouping
       In US$ million.

                          Group           2002      2001        % of Change
       Total exports
                                          35.07     32.15           9.07
       to all countries
       Electronics                        24.22     21.62          12.03
       Semiconductors                     16.81     14.91          12.80
       Electronic Data P rocessing         5.87     5.07           15.81
       Office Equipment                    0.13     0.18          (30.71)
       Medical and Industrial             0.002     0.001          70.09
       Cont rol and Instrumentation        0.01     0.02          (29.11)
       Communication and Radar             0.38     0.39           (2.97)
       Telecommunications                  0.20     0.22           (5.83)
       Automotive Electronics              0.32     0.37          (13.18)
       Cons umer Electronics               0.49     0.47            5.31

Electronics Profile
Characteristics of the industry :

      Dominated by multinational firms

       715 electronic firms
       72% of which are foreign owned and 28% are locally owned

      Export-oriented
      Engaged in assembly and test manufacturing activities
      High quality and productivity
      Growing base of components supplier
Characteristics of a typical electronics company

      ISO-certified
      Practices the best known methods in manufacturing (JIT, TQM, 5S, QPIC)
      Capabilities range from IC packaging, PCB assembly, full product
      Has in-house training capability
      Runs at three shifts a day
      Provides better compensation package compared to other industries
      Non-unionized with low turnover
      Operates with clean rooms and fully integrated manufacturing facilities


      335,000 workers as of 2002


      Available labor force of 32 million
      Over 100,000 engineering, IT and technical graduates every year
      Trainable and technically capable:
       Needs only 6-8 weeks to learn technical skills
       Familiarity with quality programs
      Cost competitiveness in terms of compensation
       Production manager US$1,000-1,500 / month
       Production supervisor US$ 450 -700 / month
       Production operator US$ 6-7 / day
      Flexible: multi-skilled and English-speaking

Global Market Trends
Semiconductors & other components

      According to the Semiconductor Industry Association, the leading voice of
       the semiconductor industry in the United States, global chip sales are
       expected to rise by 6.3% as Asian chip sales are forecasted to increase by
       45% upon the opening of new markets in China
      The world market for semiconductors will grow from US$ 141 billion in
       2001 to US$ 218 billion in 2004.
      According to Morgan Stanley, the IC market in China will grow by nearly
       30% a year during the next four to five years, driven by demand for PCs
       and mobile communications. However, they estimate that domestic
       production would only be able to meet 15% of that demand.
      Semiconductor revenue forecast:

          YEAR        AMOUNT (in US$ billion)
          2001                188
          2002                213
          2003                265
          2004                346

   Source : Dataquest


      The worldwide market for PCs is expected to turn positive in Q3.
       Increased business capital spending for leading-edge computers and
       networking equipment is going to lead to a semiconductor upturn in mid-
       2002 with an expected 12% increase in 2003. (Dataquest)
      From 130 million PCs in 2000 to 213 million PCs in 2005

Digital Consumer Electronics

      Consumer electronics is a potential growth market this year as digital
       applications continue to drive the consumer market with analog-to-digital
       conversion, 2.5G cell phones, digital cameras and digital TV with an
       expected 15% growth in 2003. (Dataquest)
      End Equipment Sales and Forecasts:

                                2000 Sales (million 2004 Projection (million
       Equipment / Product
                                units)              units)
       Internet Audio Players   2.5                 15
       Digital Set-top Boxes    28                  70
       DVD Players              20                  92
       Digital Still Cameras    9                   16
       Digital Camcorders       4                   16
       Video Game Consoles      36                  43

Mobile Phones

      Sales in cellular units are expected to increase by 18% in 2003 as positive
       / recovery signs from the cell phone market are foreseen during Q2 of
       2002. (Dataquest)
      The handset market is projected to grow from 400 million handsets in
       2000 to one billion handsets by 2004
      Demand for mobile phone handsets is recovering so fast that
       manufacturers are being hit by a temporary shortage of some parts.
      Demand is being led by Asia, particularly the largely untapped Chinese
      market, but there is growth too in both Europe and United States.


     Sales of Itanium-based servers will reach 26,000 units in 2001 and is
      expected to increase to 540,000 units over the next three years.

Smart Handheld Devices

     The worldwide smart handheld market will increase from US$ 8.2 billion in
      2000 to US$ 26.6 billion in 2004.

Optical Networking Equipment

     The market for optical networking equipment is projected to grow from
      US$ 31 billion in 2000 to US$ 93 billion by 2003.

Cable Modems and Digital Subscriber Line (DSL)

     The market for semiconductors for cable and DSL is expected to grow
      from US$ 2 billion to more than US$ 3.8 billion in 2003.

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