MANILA, Philippines — The semiconductor industry, which produces the Philippines' main export items, expects to stage a recovery this year after a double-digit fall in 2011, and is hopeful the peso-dollar exchange rate will stay relatively stable to help ensure it.

"We expect 2012 to be a snap-back year for electronics. The first quarter still won't be exciting but by the middle of the second quarter we should see some movement," Ernie Santiago, president of the industry group Semiconductor and Electronics Industries in the Philippines Inc., ( SEIPI), told Dow Jones Newswires in a telephone interview.

Electronics exports generated $23.72 billion for the Philippines in 2011. That was down 24% from the $31.08 billion level in 2010 but still accounted for 49.5% of total exports last year.

The government expects merchandise exports to increase around 10% this year after contracting 6.9% last year.

Stronger earnings from exports could undermine the US dollar exchange rate against the peso.

The US dollar ended 2011 at P43.84, the same level it finished the year before.

Santiago said a further appreciation of the peso shouldn't significantly hurt the local semiconductor industry's competitiveness as long as any strengthening is gradual.

"It's the market dictating the exchange rate. As long as the change is not abrupt, as long as it is gradual, we can manage," Santiago said.

What the industry doesn't want is to see the peso move rapidly -- in either direction.

"You don't want it rising to P46 from P42 suddenly," he said.

SEIPI will finalize its 2012 growth target next month, but Santiago said early indications suggest the industry could return to the export level it saw in 2010.

He said electronic manufacturers' inventories already are depleted and some SEIPI members are reporting growth of around 40% in their order books.

"But what will drive demand for technology products is killer apps," said Santiago, referring to software applications including games used on various gadgets such as cellular phones and tablets.