If you've scrolled past headlines about a mysterious "AI hub" being built at New Clark City, or seen farmers protesting a project with a weird Latin-sounding name, you've bumped into Pax Silica. It's arguably the biggest economic story in the Philippines right now, and almost nobody outside policy circles actually understands what it is. So let's break it down, simply.
What is Pax Silica?
Think of it like a club that the US started in December 2025. The point of the club is to make sure the US and its allies never run short of the stuff needed to build AI and computer chips: things like semiconductors and critical minerals like nickel and copper. Right now a lot of that supply chain runs through China, and this club is basically the US trying to build a version that doesn't.
The club started with 24 countries and has since grown past 30, including Japan, Australia, India, South Korea, the UK, and the EU. The Philippines joined in April 2026 as the 13th member.
Our part of the deal is a proposed 4,000-acre zone inside New Clark City, north of Manila, that the government has offered up as a site for chip assembly and testing, advanced manufacturing, and AI infrastructure.
It's not meant to be a giant data center farm, it's meant to be a factory zone. The Bases Conversion and Development Authority (BCDA) is running point on the government side since they control the land.
On the money side: at least 20 companies have already said they're interested in investing, and the US has already put in a few million dollars for early infrastructure like rail. The government's own estimate for the eventual investment pipeline is in the tens of billions of dollars, and BCDA says the project could create over 130,000 jobs. A final agreement between Manila and Washington is expected within the next couple of months.
Why did the US choose the Philippines?
Two main reasons: our mineral resources, and where we sit on the map.
We have huge deposits of nickel and copper, both of which are needed to make chips and batteries. For decades we've just dug it up and shipped it out raw, letting other countries (mostly China) do the expensive part: turning raw material into something valuable. The whole pitch of Pax Silica is to stop that leak. Keep the minerals here, process them here, keep the profit here. It's not just good for us either: the US and the rest of the West want a source of these minerals and processing capacity that isn't controlled by China, and the Philippines fits that need.
There's also the jobs angle. The Philippines is already the world's ninth-largest semiconductor exporter, but we're stuck doing the cheapest part of the job: assembly, testing, packaging. The hope is that Pax Silica pushes Filipino workers up the ladder, from people who put chips together to people who design and engineer them. On top of that, our location near the South China Sea and our tension with China make us a useful ally for a project like this.
So how big are the numbers, really?
Let's put the projections in context, because the headline figures sound huge until you compare them to what the country already does.
On exports: BCDA's own math says Pax Silica could generate up to $200 billion a year in exports once it's fully built out. For scale, the Philippines' entire export sector, everything we currently sell to the rest of the world, was worth about $84 billion in 2025.
If that $200 billion figure actually holds, one project would be worth more than double our current total exports. That's a massive "if," since it assumes the zone reaches full capacity and stays there for years, but even a fraction of that number would meaningfully shift our trade balance, which has been running a deficit.
On tax revenue: BCDA estimates P68 billion to P75 billion a year in withholding taxes, plus P60 billion in lease income spread over 25 years, adding up to as much as P180 billion a year in total government income once the project matures.
For context, the national government collected roughly P4.5 trillion in tax revenue in 2025. So Pax Silica's projected annual tax take works out to somewhere around 1.5% to 2% of what the whole country currently collects, coming from a single 1,620-hectare zone. Meaningful, but not something that fixes the national budget by itself.
Then there's the workforce angle, which is where a lot of the "we need this" argument actually comes from.
The BPO industry, our second-biggest dollar earner and the employer of roughly 1.9 million Filipinos, is genuinely nervous about AI. The IMF estimates around a third of Philippine workers are highly exposed to automation, concentrated in exactly the kind of routine, script-based work that call centers do. The industry's own trade group has already cut its 2028 jobs forecast from 2.5 million down to as low as 1.85 million, and slashed its revenue targets by billions, pointing to AI as a direct cause.
That's the pitch for Pax Silica in one sentence: if AI is going to eat into one of our biggest job-generating industries whether we like it or not, having a second major AI-and-chips-driven industry that puts us on the value-creating side of that wave, instead of just the cheap-labor side, is a hedge worth taking seriously.
The catch is that all of these numbers are projections, not guarantees, and they only pay off if the Philippines actually gets the skills transfer and higher-value jobs the pitch promises, instead of another round of low-value assembly work with a fancier name.
What are the pros? Expected returns?
The optimistic case, in plain terms:
- Lots of jobs. BCDA's number is 130,000+ jobs in AI processing, chip manufacturing, and mineral processing.
- Moving up the value chain. Instead of just assembling parts, the country gets a real shot at owning more of the process, from raw mineral to finished product, which means better-paying, higher-skill jobs instead of entry-level assembly work.
- A geopolitical hedge. After years of friction with China at sea, teaming up with a US-led group is also a political statement, not just an economic one.
- BCDA has also pushed back directly on some of the scarier claims, saying the project won't displace indigenous communities, won't include actual mining inside the zone, and is purely commercial, not military.
Why is the US treating AI as such a big deal?
To understand why the US is going through the trouble of building a whole international coalition just to secure chip supply, you have to see how insane the demand for computing power has gotten.
Big US tech companies (Microsoft, Google, Amazon, Meta, and the rest) are on track to spend around $650 billion in 2026 just on AI infrastructure, up roughly 80% from the year before, and some projections put total AI infrastructure investment approaching $7 trillion in the years ahead.
AI data centers alone are expected to eat up around 70% of all memory chips produced in 2026, which is a big part of why everything from laptops to cars has gotten more expensive: the factories that make chips are prioritizing AI customers who pay a premium over everyone else.
On top of the chip crunch, there's the mineral problem underneath it. Chips, batteries, and basically every piece of advanced electronics depend on rare earths and critical minerals like nickel, copper, and a handful of harder-to-pronounce elements, and China controls something like 90% of the world's rare earth processing.
In 2025, China used that control as leverage: it tightened export restrictions on several rare earth categories in the middle of a tariff dispute with the US, and shipments of rare earth magnets from China dropped sharply almost overnight, which slowed down automakers in the US, Japan, and Europe within weeks.
That was a wake-up call. It showed the US and its allies just how exposed they were, since a huge chunk of the technology that runs modern life, phones, cars, defense systems, AI systems, depends on materials that one country can turn off like a tap.
That's the real engine behind Pax Silica. It's not just about winning the AI race against China, it's about not being one angry press release away from a supply chain crisis. The US has been trying to fix this on multiple fronts at once: striking critical minerals deals with Australia, Japan, and others, pouring billions into domestic mining and stockpiling, and building coalitions like Pax Silica to lock in trusted partners, countries like the Philippines that have the raw materials, before China's grip on processing gets even tighter.
What's the downside? Why are Filipinos so mad about it?
The pessimistic case is just as loud:
- Water and power hunger. AI and chip facilities use a huge amount of water and electricity. Big AI data centers elsewhere can use millions of gallons of water a day just for cooling. That's a hard ask in a country that already deals with water shortages in parts of Luzon and a grid tight enough that Meralco has had to roll out rotational brownouts as recently as this year.
- "We're still the low-value partner" critique. Even with more processing happening here, some critics argue the real money, control, and cutting-edge tech still stay abroad. The worry is that we end up carrying the environmental and social cost of hosting the zone while the real upside, the profits, the intellectual property, the control, ends up sitting with foreign companies.
- Fear of land grabbing. Groups like Kilusang Magbubukid ng Pilipinas (KMP) worry that farmers and rural communities near the site could get displaced.
- Not enough transparency. A lot of the criticism isn't even about the idea itself, it's about how little the public has actually been told. What are the real costs? What did we actually sign up for?
BCDA's CEO, Joshua Bingcang, has tried to answer several of these directly: the land is already public land titled to BCDA since 1992, over 15,000 hectares elsewhere in Clark have already been set aside for indigenous peoples, and no mining will happen inside the zone itself, only processing of minerals sourced from elsewhere.
Why China is suspected behind anti-Pax Silica posts
Here's where it gets murky. A chunk of the online backlash against Pax Silica in the Philippines, especially posts framing the New Clark City hub as a secret military base or pushing worst-case environmental fears, has been traced back to accounts previously flagged as sources of Chinese disinformation.
This isn't new territory for us. The Philippines has a documented history of being a target for Chinese-linked influence campaigns, including a network of over 150 fake Facebook accounts uncovered years ago that was actively shaping local political conversation.
To be fair, both things can be true at once: the government's public explanation of Pax Silica really has been thin, and the online conversation is also a plausible target for foreign manipulation. One local analysis of where the anti-Pax Silica online activity seems to originate put it at roughly 70% China, 14% US, and small percentages from a few other countries, though tracing this kind of thing is genuinely hard and contested.
The honest takeaway: real local concerns about land, water, and transparency, and a foreign disinformation push, can both be happening in the same comment section at the same time. Telling them apart takes real digging, not vibes.
Why is China against it? What is WAICO?
Pax Silica exists specifically to make the US and its allies less dependent on China for chips, AI, and minerals. That's not a side effect, that's the goal. China is currently the biggest processor of critical minerals mined in places like the Philippines, so a club built to cut around that is a direct hit to Beijing's leverage.
China's answer came in July 2026: a rival club called the World AI Cooperation Organization (WAICO), launched in Shanghai with President Xi Jinping himself at the signing. Twenty-nine countries joined at launch, including Russia, Brazil, South Africa, Pakistan, Indonesia, Kazakhstan, and Malaysia. It's pitched as the option for the "Global South," open to basically any country, with none of the political vetting Pax Silica has. Interestingly, only one country, Kazakhstan, is currently in both clubs, which tells you how cleanly the world is splitting.
Where Pax Silica is about trusted supply chains among allies, WAICO is about broad participation and setting global AI rules. Think of it as China trying to do for AI what it already did for development banking with the Asian Infrastructure Investment Bank: build a parallel system so it's not stuck playing by rules the US wrote.
The AI World Order: Pax Silica vs. WAICO
Zoom out, and New Clark City stops being a local land dispute and becomes one small piece of a much bigger fight over who sets the rules for AI globally. Two competing clubs are now forming:
- Pax Silica: trusted allies only, focused on supply chain security, 30+ members and growing.
- WAICO: open to almost anyone, focused on governance and standards, 29 founding members and reportedly aiming for 40 to 50.
Almost nobody is picking a hard side yet. Indonesia joined WAICO while keeping its Pax Silica door open. Kazakhstan is in both. That's probably closer to the real future than a clean split into two camps: most countries will try to grab investment and technology from both sides rather than commit exclusively to either.
For the Philippines, that means Pax Silica isn't really a simple yes or no question about a factory at New Clark City. It's a bet on which tech ecosystem we plug our next industrial phase into, and whether we actually walk away with real skills, real technology, and real ownership, instead of just becoming a pawn between two AI superpowers.
As one Manila Times columnist put it, the fair way to judge this isn't ideology, it's whether it actually builds Filipino capability, transfers real technology, and stays accountable to Philippine law. That's the test that matters more than whose flag is on the press release.