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Steve Berry and Sandra Winkler
Contributing Editors |
As we begin 2004, it seems that the semiconductor industry is finally moving in the right direction. IC revenue growth for 2003 exceeded 14 percent, and growth in 2004 should exceed 20 percent.
IC unit growth was also outstanding in 2003, and should continue to move up sharply in 2004. (See Table 1.)
| Table 1. IC Unit Growth 2003-2004 |
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2003 |
2004 |
| IC Revenue ($M) |
137,774 |
164,487 |
| Annual Growth |
14.3% |
23.6% |
| IC Units (M) |
88,476 |
102,297 |
| Annual Growth |
12.6% |
15.6% |
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The fortunes of the IC packaging industry will follow this growth in the semiconductor market, and the packaging foundries should lead the way.
'Tail End of the Whip'
The packaging assembly market is the "tail end of the whip," and takes the brunt of the swings in the semiconductor market. When the economy is down, semiconductor manufacturers will fill up their own packaging plants before contracting work out to the packaging foundries, and the packaging foundries are left without work.
Table 2. Unit Volume of Packages
Assembled by Packaging Foundries |
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2003 |
2004 |
| IC Units (M) |
22,301 |
26,274 |
| Annual Growth |
18.0% |
17.8% |
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Conversely, when the market is up, the packaging foundries are filled to overflowing. Table 2 presents our forecast for the unit volume of packages assembled by the packaging foundries.
With volumes picking up sharply, the price per I/O to assemble packages has finally stabilized and is actually increasing for some packages. Rising assembly prices, however, go against the grain of pricing trends, and certainly won't continue once pricing pressure returns at the IC level.
This suggests that for packaging foundries to increase revenue, they need to offer packages and/or services that are in demand and not commodity priced, while keeping in mind that they need to offer a balanced package portfolio.
Balanced Portfolio
More than 50 percent of the packages assembled in 2002 were SO packages; thus a balanced portfolio would suggest that many different types of SOs should be present in a lineup of package offerings.
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| With volumes picking up sharply, the price per I/O to assemble packages has finally stabilized and is actually increasing for some packages. |
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Keeping customers happy requires offering high-volume commodity packages, as well as more exotic packages that offer something of higher value for the customer-and higher revenue for the contract package assembler.
What a specific packaging foundry offers depends on the needs of its client base. Test is one service that a growing number of packaging foundries are offering that is both a necessary service and less of a commodity item.
Sustainable growth also involves continuing to invent, innovate and develop. Both R&D dollars and the sharing of information help propel the wealth of ideas that will move the industry further towards a recovery.
On a different topic, when we are looking for information for our own market research reports, we look to presentations from the Electronic Components and Technology Conference (ECTC), which has become one of our favorites.
This conference is held every year just after the Memorial Day weekend. Engineers flock to this conference from the world over to both present their technology and findings, and to hear others present theirs.
ECTC 2004 will be held in Las Vegas. Come share your packaging expertise with the world and gather the critical information you need.
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Electronic Trend Publications (ETP), San Jose, is a market research firm specializing in all phases of electronics manufacturing, from wafer fabrication through final assembly. [electronictrends.com]
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