Highlights
- A CSIS panel explored potential US-Philippines collaboration in:
- Semiconductors
- Energy
- Critical technologies
- Focus on complementary industrial strengths and strategic challenges.
- Opportunities identified in:
- Chip packaging
- Renewable energy
- IT services
- Rare earth minerals
- Emphasis on collaborative human capital development.
- Success factors include:
- Strategic policy-making
- Investment in advanced technologies
- Creating demand for critical mineral and technology ecosystems beyond raw material extraction
In a humid Manila ballroom on September 11, 2025, a Center for Strategic and International Studies (CSIS) panel tried to do something unusually practical for geopolitics: match the Philippines’ industrial ambitions to America’s strategic angst. On stage were the people who actually make things—chips, kilowatts, services—and one minerals realist with a bucket of cold water. The result was a rare moment of clarity about where the two countries can win together—and where they can trip each other.
Setting the Tone
Semiconductors set the tone. The Philippines already punches above its weight in chip packaging—assembly, test, and pack (ATP)—and wants to climb into advanced packaging and IC design. The United States, for its part, is spending big on domestic wafer fabs, not back-end packaging. That’s textbook complementarity—if Washington’s trade machinery doesn’t chew it up first.
Panelists flagged the looming Section 232 investigation into chips and equipment, noting that the outcome could depend on how “country of origin” is defined (where the wafer is fabricated, where it’s packaged, or where the company is headquartered). This could potentially put the Philippine ATP in a difficult position. It matters because a single chip now hops roughly eight borders before it lands in your phone or car. Tariffs on components can cascade into delays and higher costs that make everyone less competitive—especially allies.
Energy A Quiet Kingmaker
Energy was the quiet kingmaker. Millisecond power glitches can knock a line offline for days; nobody's building advanced packaging or data centers in a place where the lights flicker. The Philippines’ plan—more renewables, grid upgrades, and a nuclear line of effort that contemplates roughly 4.8 GW by 2050—reads like a bid to become investable baseload territory. U.S. firms see an opening: small modular reactors, firm renewables plus storage, even next-gen geothermal. But nuclear isn’t just steel and steam; it’s a century-long partnership choice, with fuel cycles, maintenance, and geopolitics baked in.
Don’t Underestimate Services
Services supplied the scale. The country’s IT-BPM sector employs about 1.9 million Filipinos and is gunning for $59 billion in revenue by 2028. It’s also staring down a bipartisan “keep callers in America” bill in Washington. Industry’s rejoinder is blunt: the U.S. doesn’t have the workers or the cost structure to onshore at scale without degrading service or spiking prices. Meanwhile, AI isn’t killing Philippine call-center jobs—it’s juicing productivity. Think augmented humans, not an automation guillotine.
Rare Earth Reality
Then came the rare-earth reality check. David Abraham (opens in a new tab) of Boise State reminded the room that these markets are tiny—“vegan cheese” tiny—but system-critical. China doesn’t just process most rare earths; it consumes the majority, manufactures the equipment that processes the rare earths, and trains the talent. Adding one ton of dysprosium capacity outside China isn’t a line item; it’s a whole new supply chain and billions in capex. In China, it’s an incremental operating cost. Unless allied economies build downstream demand—EV motors, turbines, speakers, magnet-rich hardware—new non-China mines risk becoming price-taking feeders to the very market they’re meant to diversify, that’s the “extraction trap” the panel warned about: exporting raw value while importing strategic dependence. And note, President Trump, in the Big Beautiful Bill, removes many of the incentives in the form of green energy and electric vehicles.
Human Capital Deficiencies
Underneath the policy theatre, the human capital story pressed in. Both chip and services leaders described a skills mismatch—and a plan: push the Philippines from legacy to advanced packaging (including wafer-level, leadless formats), scale micro-credentials and 600-hour senior-high immersions, expand enterprise-based technical training, and prune credentialing rules so competence—rather than legacy licensing—governs hiring. It’s unglamorous, but it’s how supply chains are built.
Quantum Intrigue
Quantum drew intrigue, not panic. Yes, it threatens today’s cryptography someday—but “someday” is doing a lot of work. With half a dozen competing approaches and brutal engineering hurdles (cryogenics, stability), panelists favored market-led discovery over premature rule-making.
Strip away the slogans, and a pragmatic deal emerges. If Washington writes 232 in a way that spares allies and accelerates—not complicates—friend-shoring, if Manila locks in firm, clean power for fabs and AI campuses, and if both sides co-fund a leap from legacy to advanced packaging while nurturing real magnet-demand at home, the Philippines and the U.S. can turn a talking point into a supply chain. Fail that, and tariffs, power glitches, and the extraction trap will keep writing the story for them.
Source: Center for Strategic and International Studies (opens in a new tab)
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