Challenges for Innovation:

An Industry Perspective

Dr. Dan Lachica, SEIPI President

Inclusive Innovation Conference 2017

May 31 – June 01 | The Peninsula Manila, Makati City

THE PHILIPPINE ELECTRONICS INDUSTRY

Where It Is and Where It Should be

PRESENTATION OUTLINE:

The Philippine Electronics Industry

- Where It Is and Where It Should Be

- PATHS

- Top 10 Technology Tends

Innovation Activities

Challenges for Innovation

Summary

THE PHILIPPINE ELECTRONICS INDUSTRY:WHERE IT IS

end of 2016

Electronics51%

Non-Electronics

49%

Source: PSA

The Philippine electronics industry

remains to be the top export industry in

the country.

However for the past 3 decades, the industry has been

stagnant in its operations focusing only on assembly, test

and packaging for the past 3 decades.

Components/Devices (Semiconductors)

70%

Electronic Data Processing

19%Office Equipment

1%

Consumer Electronics

2%Telecommunicatio

n3%

Communication/Radar2%

Control and Instrumentation

2%

Medical/Industrial Instrumentation

0%

Automotive Electronics

1%

SECTORAL COVERAGE

INDUSTRY PERFORMANCEInvestments and Employment

INVESTMENTS Total foreign direct investments

approved in 2016 amounted to PhP49.349 billion.

EMPLOYMENT Total employment in 2016 was 3.2 million.

PHASE

1

PHASE

2

Project Duration: October 2016 – September 2017

Commenced last October 1, 2016

Funded by DTI-BOI and monitored by DOST-PCIEERD

To be executed by UA&P and IDC

Objective is to determine specific products and technologies that the Philippines should focus on, and the enablers for success

Project Duration: April 2015 – December 2015

Funded by USAID-STRIDE and outsourced to Mapúa Institute of Technology

Determined domestic product and technology trends through interviews and FGD among Philippine electronics industry leaders

Performed desk research of global technology and industry trends in semiconductor and electronics devices and technology

PRODUCT AND TECHNOLOGY HOLISTIC STRATEGY (P.A.T.H.S.) for the Semiconductor and Electronics Industries of the Philippines

THE PHILIPPINE ELECTRONICS INDUSTRY:WHERE IT SHOULD BE

PRODUCT AND TECHNOLOGY MATRIX

Sem

icond

ucto

r and

Other

Com

ponen

ts

Electr

onic

Data

Proce

ssing

(EDP)

Office

Equip

men

t

Telec

omm

unica

tions

Com

mun

icatio

ns

and R

adar

Cont

rol a

nd

Instr

umen

t

Med

ical a

nd

Indu

strial

Autom

otive

Ele

ctron

ics

Cons

umer

Ele

ctron

ics

Solar

/Pho

tovo

ltaic

Internet of Things

(IoT)

- Printers (3D

Printers),

- WiFi Signal

Analyzer

- Switch

- Cell Station,

Base Station,

Routers,

Modems, Hot

Spots, Fiber

- M2M Connectivity,

Switch

- Smartphones

- Notifications

System,

- Environment

Monitoring

- Smart Grids

- Point of Care

Diagnostics, Wearable

Biosensors, Intelligent

Buildings, Smart

Cements

- Intelligent Dash

Boards

- Antenna,

Entertainment System

- Smart Devices (watch,

glasses, phones),

Tablets, Cameras

- ATMs, wireless

chargers, superspeed

USB,

- Activity tracker

Energy Harvester,

Wireless Power

Transfer,

Solar Panels

RoboticsPC Mother

Boards

Sensors and

Receivers

Motors, Electronics

Point of Sale, Biometric

readers, ECG, EEG

Dosimeter, Defribilator,

Industrial Fitting, DNA

Analyzers, Hearing

Diagnostic

Instrumental, Dental

Chair & Equipment,

Ventilators, Space and

Avionics

Parking Camera, Body

Electronics and Lighting,

Hybrid Electronics

Vehicle (HEV), HVAC,

Drone, Factory

Automation/Control

Smart LED Lights TBD

Driverless CarsElectronic

Security LockMotors

Sensors (Speed, Inertial,

Humidity, Rotor position),

Body & Chassis Electronics,

Car Seat Assembly,

Automotive Steering Wheel

Assembly, Vision systems, e-

vehicles

Artficial

Intelligence (AI)DSP

Advance Driver

Assistance System

(ADAS),

Virtual Reality

(VR)

Augmented

Reality (AR)Smartphones GPS Navigation

- Various wearables

(Smart clothing,

ID Tags, Smart

Patches),

- Smartphones,

Tablets

Big Data Analytics

Servers,

Computers,

Storage,

Laptop

Storage

(Hard Drive

Disk )

Cell Station,

Base Station,

Routers,

Modems,

Hot Spots, Fiber

Servers Infotainment

Smart watch. Activity

tracker, Tablets,

Cameras

Communication

Network

(Uninterrupted)

Power Supply

(Uninterrupted) Power

Supply, Antenna for

mobile communication

system base station;

Telecomm

Infrastructure

Transceivers; Enterprise

Switching

Security Entrance

SystemElectronics for Military/DefenseDrone

Electronic Door lock,

Security solution for

hand held

merchandise

Green

Technology

Environment

MonitoringElectronic Vehicle

Energy

Harvester,

Wireless Power

Transfer,

Solar Panels

TOP 10 STRATEGIC TECHNOLOGY TRENDS IN 2017

1. AI and Advanced Machine Learning

1. Intelligent Apps

1. Intelligent Things

1. Virtual and Augmented Reality

1. Digital Twin

1. Blockchain

1. Conversational Systems

1. Mesh App and Service Architecture

1. Digital Technology Platforms

1. Adaptive Security Architecture

Source: Gartner

BENEFITS AND EXPECTED RESULTS OF PATHS

GOVERNMENT

Provide guidance to the government in providing the industry what it truly needs

collectively and not just address the need of one or two big companies.

Aid the country’s investment promotion agencies in identifying what specific niche the

Philippines has to promote to entice electronics investments in the country.

Guide government as to what infrastructure and policies should be prioritized.

ACADEME

Keep the academe at the front seat of PATHS while it is being crafted already. This gives

the academe a glimpse on how to prepare their students to be candidates for

employment in electronics manufacturing firms.

STEM (Science, Technology, Engineering and Math) courses will be enhanced and better fir

the needs of the electronics industry.

Encourage students to continue studying at graduate schools for MS and PhDs in

engineering.

OTHER STAKEHOLDERS

PATHS can prepare the local supplies with the competencies and capabilities they would

soon need in order to serve the players in the industry and internationally.

EXISTING PLAYERS

With PATHS, the firms here in the country will now have better reasons to justify to

their respective corporate headquarters the transfer of higher value activities in the

Philippines and or expansion of capacities as PATHS aims to show that the Philippine

electronics industry is now going beyond assembly, test and packaging.

In pursuing higher value activities and growth sectors, the PH semiconductor and electronics industry will be able

to reverse the sluggish performance of the industry. With the electronics sector still the biggest contributor to the

country’s GDP, more jobs could be available to the Filipinos once the industry gets back on track. PATHS can

trigger influx of new kinds of investments in the country.

INNOVATION ACTIVITIESANALOG DEVICES

Designed and released 24 new products to the

market designed by Filipino engineers in the

field of precision and power.

The company’s test and development

engineers have developed over 50 test

solutions on breakthrough products in the

area of healthcare, analog front end, RF and

mix signal devices.

ADGT has its own garage initiatives, where

engineers can pitch their ideas and get

funding within the company. One of the

accepted projects is a development of a

wearable breast cancer detection that will

revolutionize early and affordable diagnosis.

The company has a continuing effort in

industry-academe linkage. The plan is to set-

up an RF lab at UP which should boost the

Filipino engineers’ skills in pursuing IoT

projects. This is an addition to the company’s

2 labs that are built in UP for IC design and at

Mapua for Test Development

INNOVATION ACTIVITIES

CONTINENTAL PLANT (CALAMBA)

For 14 years, Continental Plant Calamba produces an array of automotive electronic safety

products including anti-lock braking speed and inertial sensors, radar, lidar, and optical advanced

driving sensors. These products are shipped to most major car-makers and need continuous

design and process improvement to maintain competitiveness in world markets.

Idea-management has long been an important part of continuous improvement. Hundreds of

ideas are proposed, evaluated, and implemented each year, and rewards are earned by the

innovators.

Beginning in 2016, an in-house R&D center was opened to design new braking sensors and

develop innovative product solutions.

Beginning in 2017, a central process engineering center was opened to develop innovative

processes for use anywhere in the Continental network.

Plans are in place to expand these new departments over the next five years.

INNOVATION ACTIVITIES

TESDA

Plan to develop regional innovation training centers

One MNC is investing close to USD100 million on capital equipment

due to strong demand.

CHALLENGES FOR INNOVATION

1. Better BS and MS programs2. Students and faculty immersion3. Relationship with schools

ROBUST SUPPLY CHAIN

EARLY TECHNOLOGY ADOPTION

HUMAN CAPITAL

1. Increase in local value content2. Automotive and industrial segments3. VC investment to bring technology to the Philippines4. Expand more product lines instead of processes

1. New product launches Automotive and industrial segments (e.g. what can the Philippines do for driverless cars)

2. Design OEM and ODM products

PRIVATE-PUBLIC PARTNERSHIPS

1. Incentives for technology start-up companies2. Funding for and development of local SMEs3. Attract investors to bring technology to the Philippines

GOVERNMENT SUPPORT

DTI/BOI/PEZA/EDC : Investments, Incentives, Roadmap, Intercessor

DOST: ADMATEL, PIIC, ERDC, Technology

TESDA: TWSP

NEEDS R&D Grants

Incentives

Talent

IP Protection

Ease of Doing Business

Peace and Order

Infrastructure*2017 Survey from some SEIPI members

PREPARING FOR THE FUTURENowadays, technology is constantly changing and rapidly developing.

We need to keep up with the innovations of our industry in order to be

relevant in the future.

INNOVATIONS

We need to adapt with the changes and the demands, not only

of today, but also of the future.

It is important to keep adding value on your products to

sustain and/or increase business productivity and growth

An innovation ecosystem is said to be thriving and healthy when the resources invested in the

knowledge economy (either through private, government, or direct business investment) are

subsequently replenished by innovation induced profit increases in the commercial economy. At that

point, the two economies (knowledge and commercial) exist in balanced equilibrium and the

innovation ecosystem is deemed to be healthy. – National Science Foundation, VA

Innovation is a fundamental source of significant wealth generation within an economy

THANK YOU and GOD BLESS.