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Electronics sector lowers 2019 export growth target

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By Bernie Cahiles-Magkilat

The electronics industry has scaled down its exports growth target this year to zero to flat growth from the original 3 percent due to heavy decline in demand for smart phones globally and impact of the extended trade war.

Semiconductor and Electronics Industries Foundation, Inc. logo (Courtesy of seipi.org.ph)

Semiconductor and Electronics Industries Foundation, Inc. logo (Courtesy of seipi.org.ph)

The Semiconductor and Electronics Industry of the Philippines Inc. (SEIPI) has decided during their first quarter meeting to reduce their target to 0-3 percent range for 2019.

“Our original growth target was 3 percent, but now it is closer to zero or flat,” said SEIPI President Dan Lachica.

Lachica said the revised lower growth target was aligned with the flat to negative growth in the semiconductor market worldwide largely due to heavy decline in demand for smart phones.

In addition, Lachica said, “We may also be seeing effects of extended trade war.”

If ever there would be no recovery in the remaining three quarters, this would be the first time in 8 years the country’s electronics export to suffer this downturn. The last time the sector posted a negative growth was in 2011. A negative growth was also reported in 2008.

Based on the latest preliminary data from the Philippine Statistics Authority (PSA), the country’s merchandise export performance in the first quarter of 2019 has declined by 3.1 percent. Electronics, which account more than half of the country’s merchandise exports, dipped by 1.7 percent to $8.8 billion. Non-electronics also decreased by 4.8 percent to $ 7.5 billion.

Earlier, Trade and Industry Secretary Ramon M. Lopez attributed the decline in the country’s exports in the first quarter to the global economic slowdown as an offshoot of the US-China trade war, plus inefficiencies and higher costs in domestic logistics.

The country’s negative exports growth performance is not unique to the Philippines as 9 Asian countries also posted declines in their exports with the exception of Vietnam and China.

Lopez also noted that the trade war saying the Philippines, as part of a global production network is being affected by the negative sentiments brought by the US-China Trade War, since US and China are the top trading partners.

According to Lopez, industry players said that global demand for electronic parts and final goods has been shrinking and will continue to weaken in 2019.

In the case of the Philippines, he said, this has been mirrored in the decline of exports in certain electronics sub-sectors such as components and devices, control and instrumentation, and telecommunication products to major markets like Singapore and Hong Kong.

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