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THEPHILIPPINE
ICTINDUSTRY
ERNIE SANTIAGOSEIPI
ITA SYMPOSIUM28 March 2007
Geneva
PART 1: THE PHILIPPINE E-SERVICES INDUSTRY
PART 2: THE PHILIPPINE ELECTRONICS INDUSTRY
SEIPI
SEIPISEIPI
THE THE
WORLDWORLDINFORMATIONINFORMATION
//ELECTRONICS ELECTRONICS
INDUSTRYINDUSTRY
WORLD INFORMATION/ ELECTRONICS INDUSTRYWORLD INFORMATION/ ELECTRONICS INDUSTRY
• ONE OF THE LARGEST INDUSTRIES IN MANUFACTURING
SECTOR: > US$1 trillion output, 6-8% annual growth
2002 2003 2004 20050
200
400
600
800
1000
1200
1400
US$B
illion
Worldwide Production
Source: Reed Research, 11/2005
US$ 1.338T
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• ASIA / PACIFIC IS THE FASTEST GROWING REGION
Source: Reed Research
Region 2002 2003 2004 2005CAG
REurope 220.4 247.5 279.1 285.8 9.0%Americas 317.6 314.1 334.3 341.9 2.5%Japan 162.4 180.2 197.8 202.3 7.6%
Asia / Pacific
343.1 386.9 448.8 492.712.8
%Rest of World
13.2 14.3 15.7 16.2 7.2%
World 1,056.8 1,143.0 1,275.61,338.
98.2%
Electronics Production
WORLD INFORMATION/ELECTRONICS INDUSTRYWORLD INFORMATION/ELECTRONICS INDUSTRY
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MIGRATION TO LOW-COST LOCATIONS MIGRATION TO LOW-COST LOCATIONS
PERCENTAGE OF ELECTRONICS OUTPUT
53%
67%75%
47%
25%33%
0%
20%
40%
60%
80%
1995 2000 2005
High Cost Low Cost
High-Cost Locations - US, Canada, Japan, Western EuropeLow-Cost Locations - Asia/Pacific, China, Eastern Europe, ROW
Source: Reed ResearchSEIPI
MAJOR PRODUCT TRENDSMAJOR PRODUCT TRENDS
Telematics – GPS, Hybrid Car, Safety
Automotive
3G Handset, TV Reception on Handset, Mobile Services
Communications
RFID, Energy Saving Control, Green Electronics, Optical Recognition
Industrial
Flat Panel TV, HDTV, Set Top Box, iPod, Digital Camera
Trends
Consumer
Product
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GENERAL TREND IN GENERAL TREND IN ELECTRONICS INDUSTRYELECTRONICS INDUSTRY
• Manufacturing: moving to low-cost regions
• Markets:
– automotive electronics is rising rapidly
– computer and communications are still big
– consumer and industrial may rebound
• Products: high technology, multi-function, networking base, quality in audio/visual effects
• Components: complexity, high precision
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THE THE
ASIAASIAELECTRONICS ELECTRONICS
INDUSTRYINDUSTRY
Source: Reed Research, 11/2005
ASIA’S POSITION IN ELECTRONICS PRODUCTIONASIA’S POSITION IN ELECTRONICS PRODUCTION
Share of Asia's Electronics Production in the World *
51.9%50.7%49.6%47.8%
40%
45%
50%
55%
60%
2002 2003 2004 2005
*Including Japan
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Source: Reed Research, 11/2005
TOP 8 ASIAN ELECTRONICS PRODUCINGTOP 8 ASIAN ELECTRONICS PRODUCING
0
50
100
150
200
250
2002 2003 2004 2005
JapanChina
South Korea
SingaporeMalaysia
PhilippinesTaiwan
Thailand
(In US$ Billion)
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Source: Reed Research, 11/2005
TOP 8 ASIAN ELECTRONICS PRODUCING TOP 8 ASIAN ELECTRONICS PRODUCING COUNTRIESCOUNTRIES
(In US$ Billion)(In US$ Billion)
2002
162.4120.2
62.438.636.426.623.815.9
2003
180.2147.4
73.841.339.434.624,217.7
2004
197.8177.190.345.944.135.926.620.1
20052005
202.3202.3210.3210.396.196.147.447.445.545.535.435.427.327.321.121.1
JapanJapanChinaChinaSouth KoreaSouth KoreaMalaysiaMalaysiaSingaporeSingaporeTaiwanTaiwanPhilippinesPhilippinesThailandThailand
ASIA / PACIFIC AS INFORMATION /ASIA / PACIFIC AS INFORMATION /ELECTRONICS HUBELECTRONICS HUB
Country / Region Role
Japan, KoreaDesign, R&D, Product Marketing
China, India, Taiwan, Thailand, Malaysia and Philippines
Manufacturing, EMS, ODM
Singapore, Hong Kong, India
IT Solutions, Software
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INFORMATION & COMMUNICATIONS INFORMATION & COMMUNICATIONS TECHNOLOGY TREND IN ASIA / PACTECHNOLOGY TREND IN ASIA / PAC
• Increasing spending, brought by China and India markets
• Wireless services overtaking fixed line
• Offshore services, business process outsourcing
• Enterprise solution
• Security issue
• Commodization of IT hardware, servers, Linux
• Digital home market
• Rising technologies, e.g. RFID
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THEPHILIPPINE
ICTINDUSTRY
A snapshot
ERNIE SANTIAGOSEIPI
PART 1: THE PHILIPPINE E-SERVICES INDUSTRY
PART 2: THE PHILIPPINE ELECTRONICS INDUSTRY
SEIPI
PART 2: THE PHILIPPINE E-SERVICES INDUSTRY
THE
PHILIPPINEE-SERVICES
INDUSTRY
- the fastest growing industry
THE PHILIPPINE E-SERVICES INDUSTRY
1. CONTACT CENTER
2. BUSINESS PROCESSING
3. ANIMATION
4. MEDICAL & LEGAL TRANSCRIPTION
5. ENGINEERING DESIGN
6. SOFTWARE DESIGN
CONTACT CENTER INDUSTRY
AS OF 1ST QUARTER 2006 Still the fastest growing industry in the Philippines Contact Centers in the Philippines: 108 Total Full Time Employees: 112,000/Total Seats: 70,000 Estimated Revenues in 2005: US$ 1.7 Billion With a Growth Rate for 2005: 90%
KEY PLAYERS IN THE COUNTRY:
Third Party Providers: Sykes, Convergys, PeopleSupport, Clientlogic, ePLDT Parlance, ICT Group, Ambergris, Teletech, eTelecare, etc…
Captives: Dell, AOL, JPMorgan, Siemens, HSBC, AIG, IBM Daksh, etc..
BUSINESS PROCESSING (BACK OFFICE OPERATIONS)
AS OF 1ST QUARTER 2006 No. of Service Providers: 62 Total Full Time Employees: 22,500 Estimated Revenues in 2005: US$ 180
Million With a Growth Rate for 2005: 80%
KEY PLAYERS IN THE COUNTRY:
Captives: AOL, AIG BPSI, Chevron Texaco,HP, HSBC, Procter & Gamble, Flour Daniel, Henkel Financial Services, Deutsche Bank, Citibank Crescent Services, Shell Shared Services, Manulife, Alitalia, Watson Wyatt, etc…
Third Party Providers: Accenture, American Data Exchange, SVI Corp, SPI Technologies, DAKSH eServices, The Environments Collaborative, Eximius BPO, BayanTrade Dotcom, etc…
MEDICAL & LEGAL TRANSCRIPTION SERVICES
As of 1st Quarter, 2006 (Medical Transcription)Total MT Firms: 66 (57 medical/9 legal)MT Professionals: 6,000 employedEstimated Revenues in 2005: US$ 76 MillionWith a Growth Rate for 2005: 80%Performance Level: 98 – 99% accuracy rate
with a turnaround time of 12 to 24 hour
Key Players in the Country:eData Services, SPI Technologies, SVI Corporation, Medscribe Asia,Transkripsyo Inc., Total Transcription Solutions, Inc., Dictation
Source,Pilipinas Data Contracts Corporation, etc…
SOFTWARE DEVELOPMENT INDUSTRY
As of 1st Quarter, 2006Software Development Companies: 300Total IT professionals: 14,000Estimated Revenues in 2005: US$ 204 MWith a Growth Rate for 2005: 40%
Key Players in the Country:Accenture, Headstrong, Microsoft, IBM Solutions, Jupiter
Systems, Oracle, ADTX Solutions, Gurango, Sun Microsystems, Intel Microelectronics, NEC, etc…
ANIMATION INDUSTRY
As of 1st Quarter, 2006 Total animation studios in the country: 40 Total Full Time Employees: 4,500 Est. Revenues in 2005: US$ 40 Million With a Growth Rate in 2005: 25%
Key Players in the Country:Holy Cow! Animation, Artfarm Asia, Digital Exchange, Top Draw Animation,Toei Animation, Top Peg Animation and Creative Studio, Creative Asia,Geebo Digital, Toon City, etc…
ENGINEERING DESIGN INDUSTRY
As of 1st Quarter, 2006Total Number of Engineering Design Companies: 14Total Number of Full Tim Engineers: 2,800Estimated Revenues in 2005: US$ 48 MillionWith a Growth Rate in 2005: 30%
Key Players in the Country:
Fluor Daniel, JGC Phils., Bechtel, Tsuneishi, Kajima Corp, Parsons, C & E Corp, EEI Corp, Eichleay Pacific, Inc., Hyundai Engineering, Foster Wheeler, Kellog, Brown & Root, Bouygues Construction, etc…
PROJECTIONS FOR THE NEXT FIVE YEARS
IT & IT-enabled Services (Source: BOI-CICT-BPA/P)
EMPLOYEES 2004 2005 2006 2007 2008 2009 2010
Customer Care 64,000 112,000 168,000 218,000 262,000 301,000 331,000
Back Office 15,000 22,500 36,000 61,000 110,000 187,000 299,000
Medical Transcription 3,000 5,000 9,000 17,000 34,000 68,000 122,000
Legal Transcription 300 450 675 1,013 1,519 2,126 2,764
Other Data Trans 2,000 3,000 4,000 6,000 8,000 10,000 13,000
Animation 2,800 4,000 6,000 10,000 17,000 27,000 41,000
SW Dev’t (Export) 10,000 12,000 16,000 22,000 33,000 50,000 75,000
Engineering Design 2,000 2,800 4,000 6,000 10,000 15,000 21,000
Digital Content 200 500 1,000 2,000 4,000 8,000 16,000
Workforce 99,300 162,250 244,675 343,013 479,519 668,126 920,764
PROJECTIONS FOR THE NEXT FIVE YEARS
IT & IT-enabled Services
REVENUES 2004 2005 2006 2007 2008 2009 2010
Customer Care 1,024 1,792 2,688 3,488 4,192 4,816 5,296
Back Office 120 180 288 488 880 1,496 2,392
Medical Transcription 42 70 126 238 476 952 1,708
Legal Transcription 4 6 9 13 20 28 36
Other Data Trans 26 39 52 78 104 130 169
Animation 52 74 111 185 315 500 759
SW Devt (Export) 170 204 272 374 561 850 1,275
Engineering Design 34 48 68 102 170 255 357
Digital Content 3 7 13 26 52 104 208
Revenues in US $ M $1,474 $ 2,419 $ 3,627 $ 4,992 $ 6,769 $ 9,130 $ 12,199
THE
PHILIPPINEELECTRONICS
INDUSTRY- the driver of economy
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CHANGING FACE CHANGING FACE OF EXPORTSOF EXPORTS
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Agro-Based Agro-Based 49%49%
Mineral Products -18%Mineral Products -18%
ELECTRONICS - 3%ELECTRONICS - 3%Garments - 7%Garments - 7%
Other Other ManufacturedManufacturedProducts – 10%Products – 10%
Forest Products - 10%Forest Products - 10%
Others - 2%Others - 2%
19751975
ELECTRONICSELECTRONICS66%66%
Garments and Textiles - 6%Garments and Textiles - 6%Machinery and Transport - 4.4%Machinery and Transport - 4.4%
Wearables - 0.16%Wearables - 0.16%Food - 2.9%Food - 2.9%
Motor Vehicles and Parts - 1.74%Motor Vehicles and Parts - 1.74%Home Furnishings - 1%Home Furnishings - 1%
Marine Products - 1%Marine Products - 1%
Giftwares - 0.45%Giftwares - 0.45%
Construction Materials - 0.49%Construction Materials - 0.49%
Organic Products - 0.18%Organic Products - 0.18%Mineral Products - 2.1%Mineral Products - 2.1%
Others - 13%Others - 13%
20062006
….FROM COCONUT CHIPS TO MICROCHIPS
2005 TOTAL PHILIPPINE2005 TOTAL PHILIPPINE EXPORTS EXPORTS
SEIPI
ELECTRONICS - 66%
OTHERS - 34%GARMENTS AND TEXTILES - 6.0%
MACHINERY & TRANSPORT - 4.4%FOOD - 2.9%
MINERAL PRODUCTS - 2.1%MOTOR VEHICLE/PARTS - 1.7%
HOME FURNISHINGS - 1.0%MARINE PRODUCTS - 1.0%
CONSTRUCTION MATERIALS - 0.5%ORGANIC PRODUCTS - 0.2%
GIFTWARES - 0.2%WEARABLES - 0.2%
OTHERS -13.0%
ELECTRONICSEXPORTS 66%
EXPORTSOTHER THANELECTRONICS 34%
2006 PHILIPPINE 2006 PHILIPPINE EXPORTSEXPORTS
Source: Tradeline Philippines
HISTORICAL EXPORTS HISTORICAL EXPORTS OF ELECTRONICSOF ELECTRONICS
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EXPORTS VALUE IN US$ BILLION
7.55
10.61
14.98
19.87
27.07 26.64
2.973.784.89
25.34
21.623.76
24.17
27.3
30
0
5
10
15
20
25
30
35
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Masterplan for Philippine Electronics Industry 1998
CLASSIFICATION CLASSIFICATION OF ELECTRONICS EXPORTS OF ELECTRONICS EXPORTS
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EMS – 26%COMPUTER REL.PROD./EDP – 20.17%
CONSUMER ELECTRONICS – 2.07%AUTOMOTIVE ELECTRONICS – 1.45%
COMMUNICATIONS AND RADAR – 0.98%OFFICE EQUIPMENT – 0.70%
TELECOMMUNICATIONS – 0.59%CONTROL & INSTRUMENTATION – 0.06%
MEDICAL AND INDUSTRIAL – 0.03%
SMS – 74%COMPONENTS AND DEVICES - 74.03%
EMS26%
SMS74%
THE TOPTHE TOP CHIPMAKERS CHIPMAKERS
Eight (8) out of the world’s top 30 chipmakers are operating in the Philippines
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TIPI Intel Philips
Fairchild
Analog
Sanyo
On Semi
Rohm
THE WORLD’S TOP ELECTRONICS FIRMS
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FOUR OF THE LARGEST HDD PRODUCERS ARE IN THE PHILIPPINES
Hitachi
Toshiba
Fujitsu NEC
DESTINATIONS DESTINATIONS OF ELECTRONICS EXPORTS 2006OF ELECTRONICS EXPORTS 2006
USA - 13% US$ 3.3 Billion
EUROPE - 19%US$ 5.1 Billion
JAPAN - 18%US$ 4.8 Billion
OTHER ASIA - 37%US$ 10.6 BillionHongkong- US$ 2.8 BSingapore- US$ 2.1 BMalaysia - US$ 2.1 BTaiwan - US$ 1.4 BKorea - US$ 1.0 BOthers - US$ 1.2 B
Source: Bureau of Export Trade Promotion, DTI
CHINA - 13% US$ 3.5 Billion
SEIPISource: 2005 Exports - Bureau of Export Trade Promotion, DTI
• IC DESIGN: ASIC AND FPGA DESIGN, VHDL VERIFICATION (INTEL, ROHM LSI DESIGN PHILS., SANYO SEMICONDUCTOR, EAZIX, SYMPHONY, BITMICRO)
• IC PACKAGING DESIGN: (TI PHILS., INC., FAIRCHILD SEMICON)
• MODULE DESIGN, PRODUCT DESIGN (LEXMARK, EAZIX, BLUE CHIP)
• FIRMWARE – EMBEDDED SYSTEMS HW/SW, EMBEDDED LINUX (CANON I.T., TSUKIDEN)
There is a budding silicon design and development industry in the Philippines
SILICON SILICON DESIGN AND DEVELOPMENTDESIGN AND DEVELOPMENT
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ICs Connectors
Magnet
Capacitors Transistors
Actuator
Packaging Materials
Diodes
Base &
Cover
Plastic Molded
Parts
Screws
Coils
Resistors
PCB/ PCBA
Metal Pressed
Parts
Spacer Ring
Motors
Magnetic Head
Carriage Assembly
…SUPPLYING THE WORLD WITH 2.5 MILLION HDD PER MONTH
A GROWING BASE OFA GROWING BASE OF SUPPLIERS FOR HDDS SUPPLIERS FOR HDDS
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Power devices
Logic devices
Strong in assembly, test and packaging design for semiconductor manufacturing services…
…CAPTURING 10% OF THE SMS WORLD SUPPLY
Memory chips
Microprocessors
Flash memory
DSPs
Opto devices
Analog devices
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TEST TEST ANDAND PACKAGING DESIGN PACKAGING DESIGN
COMPETITIVENESS COMPETITIVENESS OF THE INDUSTRYOF THE INDUSTRY
CRITICAL MASS OF GLOBAL PLAYERS
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COMPANIES COMPANIES IN THE ELECTRONICS INDUSTRYIN THE ELECTRONICS INDUSTRY
Sources: Philippine Board of Investments (BOI) & Philippine Economic Zone Authority (PEZA)
Malaysia
2%
Others
8%
Europe7%
Taiwan
4%
Singapore 2%Philippines
28%
Korea10% Japan
30%
US9%
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912 Firms
NATIONALITY:72% Foreign28% Filipino
COMPETITIVENESS COMPETITIVENESS OF THE INDUSTRYOF THE INDUSTRY
PEOPLE
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EMPLOYMENT EMPLOYMENT IN THE ELECTRONICS INDUSTRYIN THE ELECTRONICS INDUSTRY
Sources: Philippine Board of Investments (BOI) & Philippine Economic Zone Authority (PEZA)
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74 80 90120
160
220250
280315307
346
402
335
376
438
0
50
100
150
200
250
300
350
400
450
500
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Over 400T engineers, technicians and operators
EXPORTSEXPORTS OF ELECTRONICS INDUSTRYOF ELECTRONICS INDUSTRY
Source: Bureau of Export Trade Promotion, DTI
1992 2.97 B 20 % 28 %
YEAR EXPORTS(in US$)
GROWTH RATE
% TO RP EXPORTS
19931994199519961997199819992000
3.78 B 4.89 B 7.55 B10.61 B14.98 B19.87 B25.34 B27.07 B
27 %28 %55 %40 %41 %33 %27 % 7 %
33 %36 %43 %52 %58 %67 %72%71 %
2003 24.17 B 2 % 68% 2004 26.64 B 10 % 68%2005 27.30 B 2.3% 67%
2006 30.00 B 10 %
66%
2001 21.60 B -20 % 68 %2002 23.76 B 10 % 69 %
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Sources: Philippine Board of Investments (BOI) & Philippine Economic Zone Authority (PEZA)
INVESTMENTS INVESTMENTS IN THE ELECTRONICS INDUSTRYIN THE ELECTRONICS INDUSTRY
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2003 230 M
2004 443 M
2005 776 M
2006 747 M
YEAR INVESTMENTS
US$ 40 M 220 M1.290 B2.160 B1.080 B1.470 B 670 M 790 M 1.240 B 720 M
270 M
199219931994199519961997199819992000 2001 2002
TARGETS TARGETS OF THE ELECTRONICS INDUSTRYOF THE ELECTRONICS INDUSTRY
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YEAR
20022003200420052006
2007
INVESTMENTS(US $)
230 M270 M443 M776 M747 M1.000
B
EXPORTS(US$)
24.26 B 24.60
B 26.64 B 27.30 B
30.00 B 33.00 B
TARGETS
11%2%
11%2.3%
10%10%
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YEAREXPORTS
(US$)
TARGETSour industry has always been cyclical but in an upward direction
this has not changed
therefore we must continue to do theright things to prepare for our future
success
knowing that adversity always transcends unique opportunities
it is up to us to make the most of it
CHALLENGES CHALLENGES OF THE INDUSTRYOF THE INDUSTRY
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YEAREXPORTS
(US$)
TARGETSglobal fundamentals are still thereand supports a continued long term worldwide economic expansion
• world peace• trends towards freer trade• growing global communications
enhancement• accelerating pace of technological
developments
GLOBAL CHALLENGESGLOBAL CHALLENGES
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YEAREXPORTS
(US$)
TARGETSTHE ITA AND ITS ROLE IN THE
ECONOMIC DEVELOPMENT OF COUNTRIES
THE RAPID PACE OF TECHNOLOGY INNOVATION
THE CHALLENGES AHEAD
TEN YEARS TEN YEARS OF ITAOF ITA
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YEAREXPORTS
(US$)
TARGETS
END
Some men see things as they are and say, why?
I dream things that never were and say, why not?
SEIPI
YEAREXPORTS
(US$)
TARGETS
ENDEND