$1B Plant for TI in the Philippines

This is definitely great news for the Philippines in general. Texas Instruments may paved the way for other foreign companies to invest in the country. According to other reports it’s going to be eco-friendly too. Hopefully this will drive DLP HDTV's down and the calculator that every US high school student love to hate the TI-83.

On side note: Hopefully they can make a law if it doesn’t exist yet that every plant in the Philippines onward possible 2010 must be eco-friendly.

MANILA (Reuters) - U.S.-based Texas Instruments Inc. , the world's biggest maker of mobile phone chips, will build a $1 billion plant in the Philippines, choosing the country over China despite concerns about power costs.

President Gloria Macapagal Arroyo announced the investment, which will be spread out over 10 years, on Thursday, saying it would be one of the biggest foreign deals for the country.

"We look at this event as a sure sign that the Philippines has found its niche as one of the best investment destinations in Asia," she said.

"The competition for this investment was fierce."

The project comes at a fortuitous time for Arroyo, less than two weeks before congressional elections. Analysts said it would support the government's credentials for its focus on the economy but was unlikely to address bread-and-butter issues that will dominate the polls.

The state-of-the-art Texas Instruments (TI) plant will be located at the Clark economic zone north of Manila and would employ 3,000 people, officials said. It will double TI's existing capacity in the Philippines.

Construction of the facility, which will include a power plant, will begin in July and it is likely to be in production by the end of 2008, TI senior vice-president Kevin Ritchie told reporters. The group's shares closed at $35.11 on Wednesday.

The company currently has a 25-hectare complex in Baguio City in the northern Philippines, and has been scouting for a new site in either the Philippines or China. Negotiations with the Philippine government took over a year, officials said.

"We have broken the myth of China here," said Ernie Santiago, executive director of the Semiconductor and Electronics Industry in the Philippines, Inc. (SEIPI).

"It seemed before all roads are going to China, but we have made a point here that the Philippines is also a smart choice for investment.

"It will be a magnet, we expect other companies would follow," he said.

Foreign direct investment in the Philippines was only $2.35 billion in 2006, dwarfed by almost $70 billion in China.

Despite strong efforts by the government to attract foreign funds, investors have been put off by widespread corruption and an uncertain political climate. Insurgencies by communist and Islamic rebels have also hurt perceptions.

POWER COSTS

Company officials had previously said high electricity costs in the Philippines could affect the choice, but Santiago said that appeared to have been outweighed by the quality of local staff.

"I think from TI's perspective, their plant here in the Philippines is one of the most efficient they have in the world. It's proven a point that people here are decent and productive and that's the major reason."

The Philippines supplies about 10 percent of the world's semiconductor manufacturing services, including mobile phone chips and microprocessors. Texas Instruments and Intel Corp are two of the biggest companies with manufacturing plants in the country.

Once the new TI plant comes onstream at the end of next year, Philippine electronics exports could jump by $3-4 billion per year, Santiago said.

Electronics form over 60 percent of all Philippine exports and shipments were at about $29.6 billion in 2006. SEIPI has projected 10 percent growth in electronics exports this year.

POLLS

The announcement of the project comes ahead of May 14 elections to the Senate and the House of Representatives, and could have been aimed at bolstering government chances, analysts said.

"This is creating the impression that the president and the administration are doing their jobs regarding the economy," said Ramos Casiple, executive director at the Institute for Political and Electoral Reforms.

"It's really more of a propaganda point."

But he added: "The voters are voting with their stomachs. Their main concern now is the immediate problems that they and their families have."

(Additional reporting by Karen Lema)

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