The prices of semiconductors are fluctuating because of the continual advent of new products and the shortened lifecycle. In view of the cost of a complete semiconductor product, expense on packaging accounts for 5 to 25 percentage of market price of one semiconductor unit; however, as technology advances, the proportion of packaging cost to the whole cost becomes higher. Therefore, most clients of international semiconductor vendors care more about the quality of packaging, yield and terms of delivery. The packaging technology becomes so complicated and so many packaging methods available, one single international semiconductor company of IDM will find it hard to meet the increasing market demand. As a result, outsourced packaging becomes the mainstream.
In the outsourced packaging and test market, large international IDM companies shift their attention to core advantages such as design, R&D and marketing when facing fierce competition results from the rapid updating of products. Meanwhile, large international IDM companies become far less profitable under the influence of universal recession in the industry. Therefore, they sharply decrease their capital expense on semiconductor produce capacity and are rather conservative in extending produce capacity of backend packaging. Meanwhile world class package foundries continually invest in new technology R&D as advanced package demands are brought about by new IC products. As a result, large international IDM companies are more dependent upon advanced packaging technology of package and test foundries. The market scale of outsourced IC packaging, as estimated, is to grow up to USD13.1 billion in 2006. As international IDM companies speed up outsourced processing worldwide, CAGR will reach 168% between 2003 and 2009. According to ETP, market share of specific package foundry companies in package market increased from 27.2% in 2004 to 29.5% in 2005, and will increase to 31.1% in 2006, 32% in 2007 and 33% in 2008. Their total package also increased, from 28,860,000 units in 2004 to 31,830,000 units in 2005, and will increase from 37,190,000 units in 2006 to 43,060,000 units in 2007 then 49,240,000 units in 2008.
Outsourced packaging e.g. BGA, CSP, FC, QFN and SiP are all fairly advanced. To enter the field, large investment (at least one billion RMB) is needed to purchase equipment and conduct technological R&D. Without enough capital and strong technological R&D capability, it is quite impossible to enter this field. So only big enterprises may go somewhere and only a few may have a place in package. As a result, supply never meets demand in package market. Therefore, advanced package companies get a higher gross profit margin. Gross profit margins of most companies have an increment from about 6% in 2001 to 20-35% at present. Naturally their revenues also increased by a large margin. Such case may only happen to advanced package industry in electronic industry.
In the following diagram, SPIL is short for Siliconware Precision Industries Co., Ltd, so do STTS, STATS ChipPAC Ltd; AMKR represents Amkor Technology Inc and ASX is abbr. for Advanced Semiconductor Engineering Incorporated; IMOS stands for ChipMos technologies Ltd and finally ASTSF is ASE Test Ltd, a member of ASE (ASX) Group.
Taiwan is gradually becoming a power in the packaging and test. Among the global top ten packaging and test companies, six are from Taiwan, all of which are performing well in both revenues and profits. If ranking by profit scale, nine Taiwan package and test companies may be listed in the top-ten. So it can be concluded that global advanced packaging and test companies inhabit Taiwan. However, the Japanese often do well in the IC substrate field, so close business relationship between Taiwan and Japan is built as Japanese companies transfer their technologies to Taiwan when an inadequate production capacity takes place. Actually 95% of electronic technologies in Taiwan, including packaging but not limited to, are from Japan.
With the simultaneous mastering of both global advanced IC wafer foundry and IC advanced packaging technologies, Taiwan achieves best performance in the semiconductor industry worldwide and has become the heart of global semiconductor industry.
Taiwans large packaging and test companies often merge and purchase small ones when developing. On average each company merges or acquires at least three small companies. For instance ChipMos Technology Ltd has merged and acquired seven in five years. Or incorporate virtual group is formed such as Mosel Vitelic Inc, most of its member company deal with packaging & test. With their own know-how, they compete nice and well in the market. Many rank No. 1 in their respective fields and are very competitive. Sound in capital market and excellent in integrating, Taiwan companies are quite successful in mergers and acquisition, which contributes a lot to the overall success of Taiwan’s packaging and test industry.
Topics Covered:
- -Overview of Global PCB and Packaging Industry
- -Overview of IC substrate Packaging Market
- -Brief Introduction of Advanced Packaging
- -Advanced Packaging Material Industry and Market
- -Advanced Packaging Manufacturers
Companies Mentioned:
- -ASE (Advanced Semiconductor Engineering Incorporated)
- -Amkor (Amkor Technology Inc)
- -SPIL (Siliconware Precision Industries Co., Ltd)
- -STTS (STATS ChipPAC Ltd)
- -PPT (Phoenix Precision Technology Corporation)
- -Nan Ya PCB
- -Kinsus (Kinsus Interconnect Technology Corp.)
- -PTI (Power Technology Inc.)
- -ChipMos (ChipMos Technology Ltd)
- -KYEC (King Yuan Electronics Co., Ltd)
- -Chipsbank (Chipsbank Microelectronics Co., Ltd)
- -IST (International Semiconductor Technology Ltd)
- -UTAC (United Test and Assembly Center Ltd)
- -Carsem
- -IBIDEN (IBIDEN Co., Ltd)
- -Shinko (Shinko Electronic Co., Ltd)
- -Jiangyin Changjiang Electronics Co., Ltd
- -GAPT (Global Advanced Packaging Technology Limited) (Shanghai)
- -Unimicron (Unimicron Technology Corp.)
For more information visit http://www.researchandmarkets.com/reports/c45430
