Pax Silica: Can the Philippines move up the AI supply chain?

MANILA, Philippines – An editorial on the Pax Silica initiative.

“Where should we begin?”

It is a familiar prompt when opening an AI tool, an invitation to start looking for an answer. For the Philippines, however, the question is not where to begin, but where to go next in the global AI supply chain. 

AI may appear to exist entirely on a screen, but behind every system are semiconductors, minerals, manufacturing facilities, data centers, electricity and specialized labor. 

In April 2026, the Philippines joined the U.S.-led Pax Silica initiative, which aims to strengthen supply chains for critical minerals, semiconductors, advanced manufacturing and AI. The government has proposed a 4,000-acre AI-native industrial hub in New Clark City, projected to attract US$40–70 billion in investments and generate more than 130,000 jobs.

But where exactly is the Philippines being placed in this supply chain and will Pax Silica give the country greater technological control, or simply make it more valuable to industries controlled elsewhere?

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Where is the Philippines now?

Before asking where Pax Silica could take the Philippines, it is important to understand where the country already stands.

Electronics are not new to the Philippine economy. In 2025, electronic products generated US$45.89 billion, accounting for 54.3% of the country’s total exports. Semiconductor components and devices made up 40.9% of electronic-product exports in the first half of 2025.

The numbers show that the Philippines is already deeply connected to the global semiconductor supply chain.

But where exactly does the country sit in that chain?

A semiconductor goes through several stages before it becomes part of a smartphone, computer, electric vehicle or AI server. The process can move from materials and wafer fabrication to assembly, testing and packaging, and eventually toward higher-value activities such as chip design and research.

The Philippines has long been stronger in the back-end of this process, particularly in assembly, testing and packaging. The Department of Trade and Industry has identified moving beyond these activities toward chip design and wafer fabrication as a goal for the country’s semiconductor industry.

That distinction matters because the semiconductor industry is not one single process. Design, fabrication, and assembly, testing and packaging occupy different positions in the value chain, with chip design accounting for a particularly significant share of value added.

The Philippines has established strength in assembly, testing and packaging. The harder step is moving into activities that require greater research, design and technological ownership.  

If our country is already making components for the world’s technology, what exactly is Pax Silica supposed to change?

What Pax Silica wants from the Philippines

Pax Silica aims to push the country further into the technology supply chain.

The government is eyeing a 4,000-acre AI-native industrial hub in New Clark City that would connect technology firms, research institutions and government agencies while supporting semiconductors, artificial intelligence and advanced manufacturing.

The proposed development has been presented as a way to move the Philippines toward higher-value manufacturing, including the local processing of critical minerals such as nickel and copper into products for export. BCDA estimates that the project could attract US$40 billion to US$70 billion in investments and generate more than 130,000 jobs once fully developed.

On paper, the proposition is straightforward: more investment, more technology and more jobs.

But one phrase deserves closer attention: higher value.

Does that mean more semiconductor manufacturing? Advanced packaging? Chip design? AI hardware? Research and development? or does it simply mean more facilities producing technology for companies whose most valuable intellectual property remains elsewhere?

Pax Silica’s technological promise is not simply about putting more computers or data centers in the country. BCDA describes the proposed hub as a manufacturing-driven ecosystem involving semiconductors, advanced manufacturing, critical-mineral processing and research and development.

The government’s argument is that processing resources and manufacturing more advanced products locally could allow the Philippines to capture more value instead of exporting raw materials or remaining concentrated in lower stages of production.

But moving higher in the value chain requires more than new facilities. It requires the people, research, technology and local companies capable of sustaining those activities. 

Is Pax Silica generational?

Looking beyond what Pax Silica promises to build today, Mikaela Cerdenia, Research and Advocacy Coordinator at the Center for Environmental Concerns–Philippines (CEC), shared her perspective on what these projects could leave behind. 

For Cerdenia, the concern extends beyond infrastructure and investment. It is about the development path Pax Silica could lock the Philippines into and what that path leaves for future generations. 

“Genuine progress should mean that technology serves the people, that development strengthens our own industries and livelihoods, and that our children inherit a country where they can live, work, and prosper without having to surrender their land, resources, and future for someone else’s growth.”

A semiconductor facility can expand manufacturing capacity. A data center can provide computing infrastructure. But neither automatically gives Filipino companies ownership of the underlying technology.

For Pax Silica to represent a genuine technological shift, its impact would have to go beyond building facilities. It would have to strengthen Filipino capabilities in engineering, chip design, advanced packaging, research and development and technology ownership.

Otherwise, the Philippines could be building the infrastructure for the future without gaining greater control over the technology shaping it.

And that brings the discussion to one of Pax Silica’s biggest promises, jobs.

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130,000 Jobs — But what kind?

The promise of more than 130,000 jobs is among the strongest arguments for the Philippines’ participation in Pax Silica. BCDA says the project could create opportunities for Filipino engineers, researchers, computer science graduates and other highly skilled professionals.

BCDA’s latest estimate puts the potential at 130,000 to 190,000 direct jobs, with fewer than 10% potentially going to foreign workers, mainly in decision-making positions.

The scale of the projected workforce is significant, but the more important question is what proportion of those jobs involve the technology itself.

An AI and semiconductor ecosystem needs more than factory workers. It needs semiconductor engineers, process engineers, researchers, software developers, equipment specialists and technicians. These jobs all matter, but they do not necessarily place workers at the same level of the technology value chain.

For a project intended to move the Philippines higher in that value chain, employment numbers only tell part of the story. What matters is whether Filipino workers gain the engineering, research and design capabilities needed to support more advanced parts of the industry.

But for Cerdenia, the promise of job creation goes beyond the number itself. 

“The relevant question remains the same, what kind of jobs, for whom, under what conditions, and toward whose economic interests.”

The issue goes beyond the number of jobs. The initiative must also determine whether Filipino engineers, universities and local companies gain access to research, new technologies and expertise that can strengthen domestic innovation. Otherwise, the highest-value research, intellectual property and strategic decisions could remain outside the country.

Cerdenia added, “Without clear and transparent commitments, all the projections that Pax Silica promised should not be accepted as evidence of genuine industrial development.” 

Ultimately, the measure is not simply how many jobs Pax Silica creates, but whether those jobs help the Philippines learn how to create the technology itself.

The bigger question: technological dependence

Pax Silica presents the Philippines as an emerging player in the global AI and semiconductor economy. But participation in a technology supply chain is different from controlling the technology within it.

The Philippines already has an established semiconductor industry, particularly in assembly, testing and packaging. But the OECD found that the country has yet to establish a semiconductor fabrication facility, while its integrated-circuit design industry remains relatively small. It also found that Philippine firms were not yet producing some of the most advanced packaging technologies, such as 2.5-D and 3-D chip packaging.

The gap is one the government itself has recognized. The Department of Trade and Industry has identified chip design and wafer fabrication as areas the Philippines needs to develop as it moves beyond its traditional assembly, testing and packaging activities.

This shows the difference between participating in semiconductor production and developing higher-value technological capabilities.

The OECD has also identified greater investment in R&D, technology and workforce development as important to strengthening the country’s position in global semiconductor value chains.

But for Cerdenia, the gap raises a larger concern: whether the Philippines can move higher in the technology value chain without remaining dependent on those who control it.

“As it is, the Philippines would still be providing land, labor, and resources, but the highest-value technologies, capital, and decision-making remain concentrated in foreign corporations and the industrialized economies that control these supply chains.”

The concern is not simply the presence of foreign companies. Foreign investment can bring capital, expertise and access to global markets. The issue is whether those investments also build the local capabilities needed to move into higher-value technology.

If Filipino engineers gain skills while ownership and infrastructure remain foreign-controlled, the country may gain capacity without gaining control.

That is the gap Pax Silica still has to prove it can close.

Where exactly?

In job interviews, one question often asks applicants to imagine where they see themselves years from now:

Where do you see yourself in five years?

For the Philippines, Pax Silica presents a similar question but the answer reaches far beyond a career plan. It asks what kind of country Filipinos are building for the next generation.

The government sees Pax Silica as a pathway toward advanced manufacturing, AI and a stronger position in the global technology value chain. For Cerdenia, technological progress cannot be separated from what it leaves behind for future generations.

“The Philippines that today’s children inherit will depend on whether we allow technological progress to be built on the destruction of the very foundations of life.”

They may inherit more factories, more infrastructure and more technology jobs. But will they also inherit the knowledge, industries and technological capacity to determine what comes next?

“They will inherit a country whose development remains subject to the whims of external powers.”

So, how about you? Where do you see the Philippines years from now? 

As a country that hosts the infrastructure of someone else’s technological future or one that builds the knowledge, industries and capacity to shape its own?

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