US, Philippines Strengthen Military Ties

The United States and the Philippines are accelerating plans for a sprawling 4,000-acre artificial intelligence and supply chain hub in New Clark City, north of Manila, with Under Secretary of State for Economic Affairs Jacob Helberg stating the project is moving “very, very quickly.” Helberg toured the proposed site on Monday alongside representatives from over a dozen American companies, marking the first high-level inspection of what is slated to become the flagship physical facility under the Pax Silica initiative , Washington’s primary program for securing AI and semiconductor supply chains among allied nations.

This hub, situated within the Luzon Economic Corridor, is designed to anchor emerging industries in AI, digital infrastructure, advanced manufacturing, and critical mineral processing. The Philippines joined Pax Silica in April as its 13th member, aligning with Australia, Finland, India, Israel, Japan, the Netherlands, Qatar, Singapore, South Korea, the United Arab Emirates, and the United Kingdom. The Clark site represents the initiative’s first tangible infrastructure project, and its progress will determine whether Pax Silica can transition from diplomatic agreements to operational reality.

The Bases Conversion and Development Authority (BCDA), which oversees the former US military base at Clark, has allocated a 1,618-hectare parcel within New Clark City for the project. The State Department has designated it a “Golden Node,” a label for AI-native investment acceleration hubs that serve as anchors for the alliance’s supply chain strategy. The envisioned facility will bring together technology firms, research institutions, and government agencies focused on AI computing infrastructure, semiconductor packaging, and processing of critical minerals like nickel, cobalt, and copper , all of which the Philippines produces in significant volumes.

This initiative is part of a broader US effort to restructure global technology supply chains away from dependence on China. Beijing controls an estimated 90 percent of rare earth refining capacity and dominates key stages of semiconductor production. Pax Silica’s strategic goal is to create alternative production nodes in allied countries, reducing the leverage any single nation, particularly China, holds over inputs essential for AI and advanced computing. The Philippines is a natural fit: semiconductors already account for roughly 60 percent of the country’s total merchandise exports, though its industry is concentrated in lower-value assembly, testing, and packaging rather than fabrication.

Helberg’s remarks on Monday emphasized the necessity of “durability and certainty” for American investors. “Investors who are going to spend billions of dollars to build out very expensive capex need to make sure that those investments need to outlive administrations in both of our countries,” he said, referencing capital expenditure. This concern is grounded in practical reality: the Philippines operates under a six-year presidential term with no re-election, and investment frameworks negotiated under one administration have historically been vulnerable to reversal under the next.

The most contentious issue revolves around legal jurisdiction. Media reports have suggested that American personnel at the site would receive diplomatic immunity once operational. Joshua Bingcang, CEO of the BCDA, directly refuted this, stating: “That’s their request but we did not agree to that.” The distinction is critical. An arrangement placing a 4,000-acre industrial zone under US common law with diplomatic-style protections would be unprecedented for an overseas commercial facility and would raise significant sovereignty concerns in a country that spent decades negotiating the closure of US military bases at Clark and Subic Bay.

Bingcang has characterized the arrangement as a “normal commercial agreement,” similar to previous projects in Clark involving firms from Japan, Singapore, and South Korea. The BCDA has offered a two-year grace period on lease payments, treated as an in-kind contribution to development, with annual lease rates from the third year onward to be determined separately. These terms are generous but not exceptional by the standards of special economic zones in Southeast Asia, where governments routinely offer tax holidays and subsidized land to attract foreign investment.

The Clark hub is one component of a larger US strategy to build allied infrastructure that reduces dependence on Chinese-dominated supply chains, a strategy that also includes chip equipment export controls and domestic manufacturing incentives under the CHIPS Act. The Philippines’ participation in Pax Silica places it more firmly in Washington’s orbit at a time when US-China competition for influence in Southeast Asia is intensifying.

For Manila, the calculus is both economic and strategic. The Philippines has long aspired to move up the semiconductor value chain, from assembly and packaging to higher-value design and fabrication. The BCDA has courted Taiwanese firms including TSMC and UMC, and the Pax Silica hub is framed as a vehicle for that transition. Success depends on execution: building AI computing infrastructure, semiconductor packaging facilities, and critical mineral processing plants on a 4,000-acre site requires sustained investment, reliable power supply, and a workforce with skills the Philippines is still developing.

The enforcement of export controls adds another layer of complexity. The US has tightened restrictions on the sale of advanced computing chips and chipmaking equipment to China through a series of measures since 2022, most recently with 25 percent tariffs on advanced semiconductor imports imposed in January 2026. Pax Silica’s member countries are expected to align their export controls with American rules, a requirement the proposed MATCH Act would formalize by giving the Netherlands and Japan 150 days to comply or face unilateral US enforcement. For the Philippines, which has no advanced chip fabrication capacity, the immediate export control implications are limited, but broader alignment with US technology policy carries long-term diplomatic costs in its relationship with Beijing.

The BCDA and the Philippine Board of Investments are targeting groundbreaking before the end of 2028, with Helberg’s visit this week representing the first concrete step toward that timeline. The “very, very quickly” characterization is relative: two years from site visit to groundbreaking is fast by the standards of large-scale industrial development in the Philippines, where infrastructure projects routinely face delays from permitting, land disputes, and changes in political leadership.

Helberg’s itinerary also includes Singapore, where he will lead a US-ASEAN AI Ministerial Roundtable on potential AI collaboration through the US AI Exports Programme. The pairing of these two stops , a physical site inspection in the Philippines followed by a policy discussion in Singapore , illustrates Pax Silica’s dual nature: it is both a concrete infrastructure program and a diplomatic framework for aligning allied technology policies. The question is whether the concrete part can keep pace with the diplomatic ambitions. The US-China chip war has already reshaped global semiconductor trade, but building new production capacity in allied countries is a slower and more expensive process than restricting exports from existing ones.

For the Philippines, the stakes are significant. The country’s semiconductor industry generated $40 billion in exports in 2024, but almost all of that value came from assembly and packaging rather than higher-margin stages of the supply chain. Pax Silica offers a pathway to change that, backed by American capital and technology. But that pathway runs through unresolved questions about legal jurisdiction, investor protection, sovereignty, and the diplomatic balancing act required to host a US-aligned technology hub 800 kilometers from the South China Sea.