It will also be the first wafer fabrication plant in the Philippines, signalling the country's graduation to higher-end electronics manufacturing activities, officials said.

Cypress Semiconductor's majority-owned subsidiary Sunpower Corp. will begin setting up the plant next month for production of solar cells from wafers that are to be fabricated in the Philippines, said Theresa Go, director of the subsidiary's local operations.

"This will be the first time for large-scale production of photo-voltaic cells to be carried out in Southeast Asia," she said.

Photo-voltaic cells are the key components of solar energy systems, converting sunlight into electricity.

They are vital in providing power in remote areas isolated from larger power grids as well as in reducing dependence on non-renewable energy sources like oil, officials said.

Go said that most of the output would be exported with about 20 percent sold locally, adding that their photo-voltaic cells were among the most efficient in the world.

Such cells could play a crucial role in the government's effort to provide electricity to remote rural areas and small islands, she said.

Go said Sunpower decided to begin wafer fabrication in this country after the government and local utilities gave an assurance of a steady, stable supply of electricity and water, key ingredients for production of silicon wafers.

Numerous assemblers of semiconductors and other electronic products have located in the Philippines in recent years, becoming the country's largest source of exports.

The government has long been trying to convince the private sector to set up wafer fabrication facilities in the country so that more of the core materials for semiconducters would be produced locally.

However, electronics firms have complained that Philippines infrastructure is not yet up to standard for wafer fabrication, which requires a very precise, steady supply of electricity and a guaranteed supply of water.

Go conceded that making wafers for photo-voltaic cells was easier than making wafers for semiconductors.

She expressed hope, however, that Sunpower's venture would show other electronic firms that the Philippines is improving its infrastructure to allow companies to engage in more sophisticated operations.

Aside from semiconductor manufacturing in the Philippines, California-based Cypress's has facilities are in Indonesia and Taiwan.

Go said Cypress chose the Philippines for this project because it had built up its Asian manufacturing base in the country over the last seven years.

SPACE.WIRE