Artificial intelligence may look like a software revolution, but behind every AI model sits a physical economy of semiconductors, data centers, energy systems, critical minerals and advanced manufacturing.
For the Philippines, this creates an opportunity that goes beyond simply using AI tools. The bigger question is whether the country can become part of the infrastructure and supply chains that make the AI economy possible.
Economist Jesus Felipe raises this issue in his study, Could Pope Leo XIV and Karl Marx See Eye to Eye? Comments and Questions on MAGNIFICA HUMANITAS. Felipe, Distinguished Professor at the Carlos L. Tiu School of Economics of De La Salle University, wrote the paper as a critical examination of Pope Leo XIV’s encyclical Magnifica Humanitas, particularly its discussion of artificial intelligence, technology, employment and the economic system.
While much of Felipe’s discussion focuses on the social and economic consequences of AI, he argues that the Philippine debate should also take into account the country’s participation in Pax Silica.
“I add that the reflections and discussions on AI in our (Philippine) Universities should also be placed in the context of the country having joined Pax Silica,” Felipe writes.
In his study, Felipe describes Pax Silica as a US-led coalition intended to reduce dependence on China by strengthening supply chains for semiconductors, artificial intelligence infrastructure and critical minerals. He says its proponents envision a much broader ecosystem that could include semiconductor design, fabrication and advanced packaging, AI computing, critical mineral processing, energy and data infrastructure, research and development, logistics, housing and commercial facilities connected with the Luzon Economic Corridor.
If that vision materializes, the economic implications for the Philippines could be significant.
AI is also an industrial policy question
The global AI race is often discussed in terms of software and computing power. Yet advanced AI systems depend on a complicated network of physical inputs. Chips have to be designed and manufactured. Data centers require electricity, land and cooling. Critical minerals must be processed. Equipment and components have to move through secure supply chains.
This gives countries an opportunity to participate in the AI economy even if they are not producing the most advanced AI models themselves.
For the Philippines, the attraction is clear. A stronger position in semiconductor manufacturing, advanced packaging, data infrastructure and related industries could potentially attract investment, deepen technical skills and create higher-value economic activity.
Felipe’s discussion also fits into a broader development question that appears elsewhere in his study: whether countries such as the Philippines can move toward more productive industries rather than remain dependent on lower-productivity services.
Pax Silica, at least in the form described in his paper, could offer one possible route toward that transformation because it links technology with manufacturing, energy, logistics and research rather than treating AI simply as another digital service.
But Felipe does not present the initiative as an unqualified opportunity.
The risks go beyond economics
He notes that critics of Pax Silica have raised concerns about whether the Philippine government has the institutional capacity to protect national sovereignty, environmental interests and Indigenous and local communities.
“Arguments pro and against it must be evaluated properly,” Felipe writes.
This caution matters because the infrastructure behind AI can carry substantial economic and environmental costs.
Earlier in the same study, Felipe summarizes Pope Leo XIV’s warning that AI systems require large amounts of energy and water and depend on energy-intensive data centers and infrastructure.
This means that the question for the Philippines is not merely how much investment can be attracted. Policymakers would also have to consider where projects are built, how much energy and water they consume, who benefits from the resulting economic activity and what protections are in place for affected communities.
The country could theoretically attract billions of pesos in technology-related investments while capturing only a limited portion of the higher-value activities if most of the intellectual property, advanced research and strategic decisions remain elsewhere.
The quality of participation therefore matters as much as the size of investment.
Moving higher in the value chain
The Philippines already has experience in electronics and semiconductor-related activities, but Felipe’s discussion points toward a much broader ambition.
If the country participates only in the least sophisticated stages of production, the economic gains may remain limited. A more significant transformation would require stronger capabilities in engineering, research, advanced manufacturing and the infrastructure needed to support them.
This is where Pax Silica could become more than a geopolitical arrangement.
A strategy that expands semiconductor activity while also strengthening research, technical education, energy infrastructure and domestic industrial capabilities could help the Philippines move into higher-value parts of the technology supply chain.
On the other hand, a strategy centered primarily on hosting infrastructure or performing lower-value production could reproduce an old development problem: investment arrives, but the country remains dependent on activities that generate only modest productivity gains.
Felipe’s framing is therefore useful because it places AI within a much larger economic discussion.
The Philippines does not simply have to decide whether it should adopt artificial intelligence. It also has to decide what role it wants to play in the global economy that is being built around it.
For a developing country, that distinction could prove far more important than how many people use the latest AI application. The bigger opportunity may lie in whether the Philippines can build the skills, industries and infrastructure that allow it to capture a larger share of the value created by the technology.
