US & Philippines to Create 4,000 Acre Manufacturing Zone

The US has announced plans to establish a 4,000 acre industrial hub in the Philippines.

The US State Department says the hub will secure inputs vital to US and global supply chains, including semiconductor supply chains. 

This comes as US President Donald Trump is set to meet Chinese President Xi Jinping in May 2026 after strained relations with the two powers over rare earths needed for manufacturing. 

The manufacturing zone

The US State Department said in a statement that the hub is expected to serve as a purpose-built platform for allied manufacturing.

The currently conceptual site will serve as an “investment acceleration hub” where the specific industrial activities taking place will be shaped by market demand, host-country comparative advantages and the “evolving needs of the allied network".

Situated within the Luzon Economic Corridor, the State Department said the Zone can leverage the Philippines’ geographic centrality in the Indo-Pacific as well as “its young and technically skilled workforce”.

This site, the first of its kind, is being designated by the Philippines as an Economic Security Zone, a new model for AI-native investment acceleration hubs being developed under the Pax Silica Initiative.

The Wall Street Journal reports that the administration will ask companies to put forward proposals to compete for a spot in building out the hub, giving priority to bids that will move critical minerals processing and manufacturing away from Chinese suppliers.

China and supply chains

Pax Silica is the Department of State’s effort on AI and supply chain security which spans advanced manufacturing and AI infrastructure with a goal to “reduce coercive dependencies”.

As the US ramps up manufacturing and production of these facilities in line with new technological developments, concerns have been raised about how dependent US supply chains and manufacturing is on China. 

Undersecretary of State for Economic Affairs Jacob Helberg told the Wall Street Journal: “The current geography of the global supply chain is completely unsustainable.” 

“If you look at the whole supply chain stack, layer after layer, it is totally dominated by China.”

China currently accounts for roughly 70% of rare earth mining, 90% of separation and processing and 93% of magnet manufacturing, according to the Centre for Strategic and International Studies.

Rare earths exported for US manufacturing

The Philippines holds significant reserves of nickel, copper, chromite and cobalt. These elements are used in a variety of manufacturing industries including energy storage, batteries, wind turbines and the metallurgical industry.

The resources will be used by US companies operating in the new hub in the Philippines and exported back to the US for manufacturing, Jacob said to the Wall Street Journal.

The new announcement builds on strengthening relations between the two countries. In February 2026, Senior officials of the Philippines and the US met in Manila for the 12th Philippines United States Bilateral Strategic Dialogue where they agreed to catalyse private sector development with a focus on the areas of transport, logistics, energy and semiconductors.