s it is for the products they examine, the ultimate test for assembly-and test sites is whether success can be replicated.
      In the case of Texas Instruments' US$1-billion, 3,000-job new project in Clark Freeport Zone in the Philippines, past success indeed may be an indicator of future results. So says Paul Fego, vice president, worldwide manufacturing technology & manufacturing group for Texas Instruments.
      The company's search for a new site encompassed locations in China, Vietnam and Thailand. But nearly 30 years of experience at a nearby test and assembly site in Baguio City convinced the company not to stray from a good thing.
      "When it came to the final three, the driver of our ability to capture the speed of this project on the backs of our strong Baguio City team was a major thrust for us," says Fego. The new facility will be the first ground-up facility to be Leadership in Energy and Environmental Design (LEED) registered in the Philippines, using many features that first appeared at the company's most recent semiconductor project in Texas.
      "As we look toward our 30-year anniversary in the Philippines in 2009, we expect this new facility to be a flagship for the company in terms of quality and output," said Bing Viera, managing director of TI Philippines, at the May 2007 project announcement.
      The new site will occupy 828,848 sq. ft. (77,000 sq. m.). Due to start production during the second half of 2008, it will double TI's capacity in the Philippines and could generate as many as 20,000 direct and indirect jobs in the region, just 68 miles (110 km.) north of Manila. Baguio City is another 85 miles (137 km.) north.
      Fego credits the foresight of now-retired TI executives for landing in Baguio in the first place. The site conducts final assembly and testing of semiconductors for customers in the computer, aerospace, telecommunications, and automotive industries in the United States, Asia, and Europe. He says the quality of the people working there was the chief factor in locating the new project nearby, and that credit goes to both the internal Baguio organization at TI as well as external partners in government and universities. Texas Instruments is the country's leading exporter.       Fego says the site selection took over a year, and included team members from operations, finance, facilities, legal and customer and quality departments. He says the criteria, in no particular order, included economic factors, market potential, tax and duty abatements, GDP of the country, intellectual property protection and government restrictions and permitting, "which can become a real bottleneck sometimes."
      His list goes on, and includes ease of doing business, education levels, retention and recruitment factors, workplace environments, availability of local support services and the appeal of the location to attracting various generations of the work force. Completing the criteria list were operational costs, including labor, telecom and environmental work; transportation and logistics; natural disaster risk and political stability.
      Growth in the Philippines has been both hampered and helped in the past several years, in part due to elements beyond the nation's control such as catastrophic weather events. In 2005, an expanded value-added tax (VAT) was imposed. In early 2006, a coup was attempted and thwarted. Market prices for power were introduced. At the same time, also in early 2006, the United States upgraded the Philippines from the special 301 "Priority Watch List" to the "Watch List" after the government took steps to rein in counterfeiting and piracy.
      Meanwhile, the nation's freeport zones have begun to offer incentives worth noting. In the Clark Freeport Zone, for example, corporate income tax is equivalent to 5 percent of gross income, instead of the usual 32 percent. And as befits the zones name, capital equipment and raw materials can be imported duty free.
      The Clark Special Economic Zone – at 69,000 acres (27,600 hectares), close to the size of Singapore – is part of the Subic Bay region in the central Luzon province of Pampanga that also includes the Subic Bay Freeport Zone, the Central Techno Park (found in Tarlac), and the Bataan Technology Park. Within the Clark SEZ is the 10,872-acre (4,400-hectare) Clark Freeport Zone. As of early 2008, some 695 projects have signed lease agreements with the Clark Development Corp. (CDC). According to the Zone's public relations materials, "around 389 foreign and domestic investors have relocated to and funneled around US$24.33 billion worth of investments into the Clark Freeport Zone since the CDC was formed in 1993," following the passage in the U.S. of the Bases Conversion and Development Act of 1992. As part of the agreement for the new TI project, CDC will devote around 74 acres (30 hectares) in the Freeport Zone to accommodate support industries and suppliers of the company – expected to number about 500 in all.       One thing Texas Instruments did not need in this instance was the help of outside consultants.
      "Texas Instruments, having the infrastructure it has around the world, has a pretty good foothold in many different countries," Fego explains, "so we had a lot of this information already in front of us. And there were customers willing to share with us."
      As with other large projects, one challenge with this one was confidentiality.
      "When word gets out of a project of this magnitude, you're trying to fend off people trying to meet with you," explains Fego. "We were selective about visits and data collection. IT was a methodical process. Having a history in many of these countries makes the process a lot easier."
      Nevertheless, once the rumor was alive, it was hard to quell.
      "Being who we were, we would downplay it and make no comments," says Fego. "But when we started to engage with local officials and have discussions with suppliers, we knew things would pick up. Towards the middle of the process, it was getting a little hectic. I think the core team members did a good job keeping their identities private."
      In terms of incentives, Fego says TI had defined some things it felt were necessary to success, and that each candidate area offered a spin that was meeting some of those requirements. What emerged from the mix was the "ability to execute efficiently, to get on the ground" at Clark, with the backing of the Baguio City team.
      Fego points out that it's not all about just assembly and testing either, as the company brings "bump" probe technology from its fabs to this new facility. The technology involves the way wafers are routed for packaging. Assembly and test operations are the final step in semiconductor manufacturing before chips are shipped to customers. As the company explains, "starting with bare silicon chips called 'die,' assembly/test sites perform precise packaging operations that serve as the interface between the integrated circuit and the system it supports." In a project the size of about 14 football fields, half the space will be devoted to a bump probe environment.
      Asked whether any bumps had occurred in the road to project completion thus far, Fego says, "I can honestly say in the starting of Clark we have not seen an area that has raised concerns about our decision." Again, he says, the environment around Baguio City is what has excited the Clark project's environment, resulting in an outpouring of what he calls "proactive behavior."
      "We are quite pleased about the economic zone support – we are getting contractors there, moving materials in rapidly and getting permits. The universities are actively involved with us already. We are establishing an engineering program with them, and giving them assembly-and-test tools they'll use in their classes."        Meanwhile, in the news media and in the Conway Data New Plant Database, evidence of a large number of large-scale, high-employment industrial projects coming into being in the Philippines within the past year or two continues to stack up. The latest was the March 2008 news that Samsung would invest approximately $2 billion in a Clark Freeport Zone facility, prompting the CDC to request approval from the Philippines National Economic Development Authority for Phase 3 of a Clark 230-kV transmission project. Samsung still has not formally announced the project. It currently operates a plant in Calamba Premier Industrial Park in Laguna, some 34 miles (54 km.) south of Manila.
      Is the Philippines keeping pace with work force and infrastructure needs? Recent activity includes:

      • The launch, in mid-May, by Subic Bay International Terminal Corp (SBITC), a member of International Container Terminal Services Inc, of a new 300,000-TEU container terminal in the Subic Bay Freeport Zone;
      • The continuing development of Diosdado Macapagal International Airport (DMIA), one of the largest in Asia. Occupying 6,177 acres (2,500 hectares), the facility has two parallel runways each spanning nearly two miles (3.2 km.), both of which can be extended to 2.5 miles (4 km.) in length;
      • A focus by the Bases Conversion and Development Authority on the construction of the Subic-Clark-Tarlac Expressway, connecting by superhighway the primary commercial hubs of central Luzon.

      Fego admits that the infrastructure element of talent and skill retention was among the chief items under discussion during the site selection. He says not only is there not a problem, but that Texas Instruments is glad to help the region attract more.
      "Anywhere we go, if you talk to people there, you'll see we're big supporters of promoting the areas we're in," he says. "We've seen from our experience with Baguio City that their commitment hasn't been anything less than outstanding. We think anybody who comes here will be pleasantly surprised by the quality of these individuals."