US Criticizes China Dominance in Semiconductor Supply Chains
US Undersecretary for Economic Affairs Jacob Helberg on Monday, May 18, defended the planned Economic Security Zone in New Clark City under the US-led Pax Silica initiative while sharply criticizing China's control over critical technology supply chains. Speaking at the zone's site in Luzon, Helberg called China's dominance a "hostage chain," stating that the United States and its partners are seeking to build an alternative supply chain network for artificial intelligence and semiconductor-related industries.
"When ninety percent of a critical input comes from one country, you do not have a supply chain. You have a hostage chain," Helberg said in prepared remarks. He cited instances where orders are cancelled and where "a single notice from an office in a far-away capital can shut down a metal the whole industry depends on," referencing China's controls on rare earth exports and critical minerals. Helberg said the project seeks to combine "the predictability and certainty of American law to the speed and scale of Asia."
## Governance Structure Negotiations Ongoing
Details surrounding the joint governance structure of the zone remain unresolved. A US Embassy fact sheet stated: "The two governments intend to identify appropriate frameworks for the long-term development of the Zone that facilitate sovereign alignment and shared upside as it scales."
Joshua Bingcang, CEO of the BCDA (Bases Conversion and Development Authority), said the Philippines rejected US proposals that would have placed the zone under US law or granted it special legal status such as diplomatic immunities. "That's [the US'] request but we did not agree to that. There are two laws that will govern the transaction here. The Investors' Lease Act and then the BCDA law which was confirmed by the Department of Justice. So it will be treated as a regular business development contract, no special arrangement to be accorded to the US government," Bingcang said.
Helberg indicated that negotiations were still ongoing and said there is a two-year window for negotiations for the deal's final terms.
## Philippine Development Objectives
The Philippines joined Pax Silica in April. Philippine officials have framed the initiative as an opportunity to attract high-value technology industries, data centers, semiconductor-related manufacturing, and critical mineral investments into the country.
Department of Trade and Industry Undersecretary Perry Rodolfo said: "With Pax Silica, it opens another platform for us. It's not just green minerals, green metals [used for sustainability technology]. Now we can aspire for tech minerals, green tech minerals… also useful for the AI ecosystem." He added that the initiative aims to boost the Philippines' ability to process minerals rather than simply export them unprocessed.
## Official Response to Concerns
Critics have raised concerns about foreign control, environmental risks tied to mining, and possible integration of industrial infrastructure into broader US strategic and military objectives. Rodolfo rejected concerns that facilities under Pax Silica would be used for war production capabilities: "This is not for those materials such as the manufacture of bullets or missiles… This isn't it. This is really to secure the supply chain for your AI ecosystem."
