GlobalSource warns Philippines against low-value role in Pax Silica semiconductor hub

GlobalSource Partners has urged the Philippines to ensure it captures high-value parts of the supply chain under the Pax Silica initiative, rather than acting merely as a resource supplier. The warning comes ahead of a planned $10 billion semiconductor and manufacturing hub in New Clark City, Tarlac

GlobalSource Partners, Inc. has cautioned that the Philippines must approach the Pax Silica initiative on its own terms to become a value creator rather than a mere supplier of resources. In a commentary released Monday, GlobalSource Country Analyst Diwa C. Guinigundo said the country should not surrender high-value work to foreign partners.

“Pax Silica presents the Philippines with a significant opportunity to participate more deeply in the emerging global technology and supply-chain architecture, but it should not be approached as a blank check,” Mr. Guinigundo said. “The appropriate response is neither automatic embrace nor rejection, but Pax Silica on Philippine terms — with transparency, Philippine jurisdiction, environmental safeguards, competitive power and water, community protection, and clear accountability.”

The Philippines was onboarded to the Washington-led Pax Silica initiative in April, joining 23 other signatories and one nonsignatory participant. The initiative’s Philippine project is headlined by a 1,620-hectare artificial intelligence-native semiconductor and manufacturing hub in New Clark City, Tarlac, with an initial investment target of US$10 billion. It aims to integrate semiconductor design, fabrication and advanced packaging, AI computing, critical mineral processing, energy and data infrastructure, research and development, logistics, office, housing, and commercial development within the Luzon Economic Corridor.

Mr. Guinigundo warned that Pax Silica risks trapping the country in low-value participation while foreign entities capture the actual profits and innovation. He said the Philippines can prevent this by requiring technology transfer, research and development integration, local skills development, and the onboarding of Filipino experts and small businesses.

The analyst also flagged potential environmental and social risks. The heavy energy and water demands of the project could inflate utility rates and disrupt supplies for households and agriculture, he said. “The country should insist on independently validated water and power studies, transparent environmental safeguards, and clear rules preventing industrial demand from compromising household and agricultural requirements.”

Mr. Guinigundo added that the government should ensure Pax Silica-related developments proceed only after obtaining free, prior and informed consent, providing fair compensation, and establishing documented environmental safeguards to protect land and indigenous communities. He also called for full transparency in the Pax Silica framework and public scrutiny before any binding commitments are finalised.

“The Philippines should not fear participation in the emerging technology economy,” Mr. Guinigundo said. “But neither should it enter that economy merely as a provider of land, labour, minerals, electricity and water. The objective must be much more ambitious — and this is to make the Philippines a producer, innovator and value creator in the new global technology economy.”