BROADLY, Pax Silica is the U.S.-led economic security alliance launched in late 2025 to break, neutralize, and deter China’s near-monopoly on the global artificial intelligence (AI) and microchip supply chain.
China controls almost 90% of rare earth refinery capability considered necessary for semiconductors. After the 2025 imposition of higher tariffs by the U.S, China responded by restricting rare earth exports.
As explained by Defense Secretary Gibo Teodoro, the U.S. counter response: build a trusted supply chain from minerals and construct AI data centers with allies.
Pax Silica, as an economic security alliance, originally had nine member-states: the U.S., Japan, South Korea, Singapore, United Kingdom, Israel, United Arab Emirates (UAE), Australia. They were later joined by Finland, Sweden, Qatar, India. The Philippines joined on April 16, 2026 as its 13th member-state. It is the first in Southeast Asia after Singapore.
What the U.S. originally conceived did not end in membership of several member-states. Individual member states were asked what they could contribute.
For its part, the Philippines, according to Teodoro, has committed 1,620 hectares (4,000 acres) in New Clark City, Tarlac as “Golden Node” and AI-native industrial hub. This part of New Clark City was once part of Clark Air Base, one of the two controversial major U.S. military facilities in the country. They were dismantled in 1992 after the devastating eruption of Mt Pinatubo, which was inactive for more than 600 years until it erupted 36 years ago.
The Pax Silica site, to be called “Economic Security Zone,” will be under “joint governance,” according to the letter from BCDA chief Joshua Bingcang to U.S. State Undersecretary Jacob Helberg, proposing the creation of the Pax Silica Coordination Office.
As explained by DND briefing papers, the Philippines brings untapped critical minerals in the new economic security alliance like copper (Tampakan), nickel (Palawan, Surigao, Dinagat, and Zambales and they have one of world’s largest reserves), gold (Diwalwal, Masbate), cobalt, rare earths in Palawan. The DND papers said only 5% of these mineral deposits have been explored.
The Philippines has existing strength in the semiconductor business, which constitutes a little over 50% of Philippines exports to reach $39 billion in 2024. Its semiconductor trade focuses on assembly, testing, and packaging of microchip products.
As envisioned by the U.S., the goal is to move the value chain, where participating countries like the Philippines will not just export raw ore, but pursue processing, perform advanced chip packaging, and host AI data centers.
The concept of Pax Silica has become an issue this year because of certain unclear terms. For one, the issue of sovereignty is on top of the list. There is no “no special arrangement” under the economic security alliance.
The so-called April 2026 documents contained words like “joint governance” and “sovereign alignment” and even a proposal for immunity for U.S. firms. Press reports cited concerns of left wing groups on extraterritoriality like Subic and Clark, two former U.S. bases.
Both Malacañang and Teodoro clarified that there is “no special arrangement” under the proposed alliance and that it is still covered by Philippine laws. Moreover, it does not give diplomatic immunity to foreign nationals involved in this project.
Helberg claimed the immunity talk was “taken out of context.” But certain political entities still raised and questioned the issue of governance of the special Clark Zone for Pax Silica. Certain lawmakers of the Liberal Party asked for a congressional probe of Pax Silica.
In the protest that followed the June 27 SONA of President Ferdinand Marcos Jr., opposition groups claimed the AI data center would require millions of gallons of water for cooling. They said the province of Tarlac is already pressed for freshwater supply for irrigation for crops, primarily rice.
Opposition groups also raised concern of potential damages in the provinces of Palawan and Zambales, as accelerated mining could also mean displacement of Aeta and farming communities. Other nationalist groups cited the history of U.S. bases contamination in Clark and Subic.
Other left wing groups claimed the Philippines would be at the losing end of this new security alliance, as it would only reinforce what it termed “neocolonial “ status and economy. They said the country would only fall victim to what it called “digital colonialism,” which was first raised in Indian Parliament.
Teodoro says this security alliance could trigger industrialization, not war, as feared by certain quarters. Meanwhile, critics said that establishing a critical AI supply chain hub could make the Philippines a legitimate target for China in a Taiwan-South China Sea conflict.
It was reported that Iran targeted UAE data centers at the start of the recent Middle East war. The Philippines faces the same risk, it was said.
The government meanwhile said the opposite could be expected. Having the U.S. technology investments could mean the “economic security blanket,” which could serve as a deterrent from future attacks. China would not attack if it disrupts the global chip supply and angers many nations like Taiwan’s “silicon shield.”
As of end-July, the U.S. and its allies have not developed a full framework deal yet for Pax Silica. Finance Secretary Frederick Go said the framework deal could be developed within 2026, possibly the projected state visit of U.S. President Donald Trump this year.
Meanwhile, the Senate also plans a parallel investigation. Sen. Risa Hontiveros said she wanted details of the Pax Silica deals in the country like tax breaks, land lease rates, profit sharing, among others.
At the moment, the Philippines is embroiled in public debates to create opportunities to move up semiconductor value chain and get U.S. investments vs risk of becoming raw material supplier and being drawn into the U.S.-China tech war. (To be concluded)
