Current Issue An Independent Journal Dedicated to the Advancement of Chip - Scale Electronics March 2001 Email the editor

CEO/Founder Exits Belgium's CS2; Company Looks for Buyer/Investor

Steve Lerner

Brussels-Yves De Poorter, representing the company's major investors, has replaced founder and industry veteran Steve Lerner, as president and CEO of Custom Silicon Configuration Services (CS2), an IC assembly and test provider. The company, meanwhile, is looking for an investor or buyer.

Reached at his home near Brussels, Lerner declined comment. He remains on the board of directors, however, and is reportedly active in trying to find a buyer for the company.

In January, a Brussels court granted CS2 a suspension of its outstanding debts through June 20. At that time, the court will decide whether to issue a Gerechtelijk Akkoord/Concordat judiciare -described by company officials as being comparable to creditor protection under a U.S. Chapter 11 bankruptcy.

An official news release says, "During the period of suspension, the company will actively pursue its efforts to secure additional financing" to reactivate projects that have been placed on hold.

An official familiar with the situation described De Poorter as a "beancounter" whose task is "To turn the company cash-flow positive and to find an industrial or financial partner."

CS2's chief problems involve both the general industry softening that began in Q4 last year and undercapitalization at the company, according to industry observers. CS2 employs about 250 people, up from 150 a year ago.

Special Report

IC Assemblers Attracted by China's Siren Song; Amkor Joins ASAT and IBM in Building Boom By Ron Iscoff, Editor Amkor is the latest IC assembler to select China for a major facility. China, one of the oldest civilizations in the world, has lately been rediscovered by companies in one of the newest international industries-the IC assembly and test business. U.S.-based Amkor Technology recently planted its corporate flag in Shanghai. The assembly giant announced that it will open a major facility there to serve the domestic Chinese market. Amkor's plants will be sited in the Waigaogiao Free Trade Zone, Pudong, Shanghai. To speed production, Amkor will initially lease two buildings. One will be devoted to assembly, the other to test, for a total of about 140,000 square feet. Amkor has also optioned two million square feet of land nearby, which the company believes may be the last remaining large plot in that development. Amkor will exercise its option as needed. Currently, with its plants in Korea, the Philippines and its new joint venture with Toshiba in Iwate, Japan, Amkor has some 4.5 million square feet of bricks and mortar. Amkor plans to roll products out of Shangai beginning in Q3. Baseband Processors and Controllers The plant will first package and test devices for baseband processors and controllers. Later, the portfolio will expand to include devices for telecom and computer products. In a recent interview, John Boruch, Amkor president, said after the first year the plant will boast a workforce of about 500-and will increase its worker count steeply thereafter. While Amkor has not put a price tag on its Shanghai investment, publicly, Boruch said Amkor will spend "hundreds of millions" on China-based facilities. Building Boom John Boruch Boruch said Amkor selected China for its next major investment due to "prodding by a number of our customers to offer a packaging capability there." These customers are serving the domestic Chinese market for products such as cellular phones, Boruch added, and have to meet local content rules. Because of the industry downturn, Boruch said Amkor will buy relatively little new equipment for the Shanghai plant. "We will bring some 80% of the existing, but relatively new, equipment from our factories in Korea and the Philippines. We'll start buying new equipment in 2002," he added. "The market forces are the biggest of several factors," he said. "Our customers view China as the country with the largest potential for growth over the next five years. Next is the Chinese government's requirement for suppliers to produce a certain amount of value in that country-and the most obvious area is the backend." No Restrictions on Assembly Unlike wafer fabrication technology, the U.S. government does not place restrictions "as far as we know," on IC assembly or test," Boruch said. Although Amkor owns 42 percent of Anam's wafer fab in Korea, Boruch said Amkor has no plans to open a fab in China. "Our strategy is to partner with various fab companies rather than setting up our own fab. There are several fabs in the Shanghai area right now," he said. In staking its claim in China, Amkor joined assemblers Alphatec of Thailand, Taiwan's ASAT, Korea's ChipPAC, Armonk, N.Y.'s IBM and Pantronix Corp. of Fremont, Calif. IBM, alone, has earmarked $300 million to build an IC packaging plant in Shanghai, as part of a $5 billion worldwide expansion plan. Alphatec and ChipPAC (formerly Hyundai's Assembly and Test Division) were among the first offshore companies to tag China for backend production. Alphatec, which operates its main plant near Bangkok, has sited the 90,000 square foot Alphatec Electronics Corp. of Shanghai in the Pudong area. The Thailand-based assembler plans to expand the facility this year by adding 200,000 square feet. ChipPAC is the first IC assembler to offer direct sales from its 430,000 square foot Shanghai plant, according to the company. The plant was established in 1995 and employs about 1,500 workers. In a November news release, ChipPAC, citing industry forecasts, said "the near 10 billion unit Chinese market" will become the world's second largest market for semiconductors within 10 years. Edward Combs U.S.-based Pantronix Corp. has already broken ground in Shanghai, and plans to open in July with some 1,000 employees-expanding gradually to 10,000, as reported exclusively in Chip Scale Review (January-February 2001, p.5). The Pantronix principals also own IC assembler Amertron in the Philippines. ASAT, meanwhile, is concentrating its capital resources not in Shanghai, but in Shenzhen, near Hong Kong's New Territories, Edward Combs, executive vice president, told Chip Scale Review. Infrastructure Combs says the infrastructure in Shenzhen, because of its proximity to Hong Kong, offers an infrastructure that is superior to Shanghai. "Whenever we need to, we can bring people from Shenzhen into our factory in Hong Kong," he says. "That was one of the reasons we chose this area." ASAT's Shenzhen plant, which has already broken ground, is scheduled for completion by Q4 this year-at the earliest-but more likely Q1 next year, Combs adds. There are a combination of reasons for selecting China for ASAT's next plant, Combs reported. Labor costs are low. There is a vast labor pool, and the plant will give ASAT a jump start into the vast China market. Although only a handful of offshore assemblers have announced plans to build in China, it's likely that the former bamboo curtain will yield to a new type of gold rush-this one for the choicest land to locate new assembly and test plants.

William R. Hewlett, Hewlett-Packard Co-Founder, Dies at 87

Mr. Hewlett and the Late David Packard Grew a Technology Empire that Reaches from Silicon Valley Around the World

Palo Alto, Calif.-William R. Hewlett, co-founder of the multinational company that bears his name and that of his late co-founder, David Packard, died January 5 at his home of natural causes. He was 87.

Born on May 20, 1913, in Ann Arbor, Mich., William Redington Hewlett attended Stanford University, a stone's throw from the current HP headquarters, where he earned a a bachelor's degree in 1934.

In 1936, he received a master's degree in electrical engineering from MIT, and returned to Stanford to receive a master's degree in engineering in 1939.

The late David Packard (left) and William Hewlett turned a $538 investment into one of the world's largest companies. This photo from 1988 is from the HP archives.	This garage at 367 Addison Ave., Palo Alto, was declared a California State historical landmark in 1989.

Formed HP with $538

Hewlett and Packard met while Stanford undergraduates and became friends. In 1939, they formed the partnership known as Hewlett-Packard Co. with $538 of their own money. Mr. Packard, who died in 1996 at age 83, was the high-profile half of the pair.

The company's first product was a resistance-capacitance audio oscillator. Walt Disney Studios used eight of the oscillators in the production of "Fantasia." The machine was based on a design that Hewlett developed when he was in graduate school.

During World War II, Mr. Hewlett served on the staff of the Army's Chief Signal Officer, where he was in charge of the electronics section of the New Development Division of the War Department (now Defense Department). Mr. Packard served as U.S. deputy secretary of defense in the first Nixon administration.

Mr. Hewlett became HP president in 1964 and was also named CEO in 1969. He retired as president in 1977 and left the CEO's post a year later. Until his passing, he served as director emeritus.

Now Two Multinational Enterprises

The original company founded by the men now consists of two multinational enterprises: HP, with total revenues of $48.8 billion in FY 2000 and more than 88,500 employees, and Agilent Tech-nologies Inc., with net revenues of more than $10.8 billion in FY 2000 and more than 47,000 employees.

The legendary Palo Alto garage, where the men developed their first products, is now a California State historical landmark.

Survivors include his second wife, Rosemary Bradford Hewlett, children and grandchildren from his first marriage and stepchildren from his second marriage.His first wife, Flora, died in 1978.

Asymtek and RIT are conducting joint research on no-flow underfills.

Asymtek, RIT Jointly Researching No-Flow Underfills

Carlsbad, Calif.-Asymtek Corp. and the Rochester Institute of Technology, Rochester, N.Y., are conducting joint research on the material-machine interactions of commercially available no-flow underfills. This is a new project in a series of ongoing studies with RIT.

Employing an Asymtek Century C-718 dispensing system, RIT plans to develop practical parameters and measure the efficacy of different ways to apply no-flow underfills. The study will compare non-contact jetting with traditional contact needle dispensing. [asymtek.com]

Austin America Receives Patent

Austin, Texas-Austin American Tech-nology has been granted a U.S. patent for the drying technology employed in the company's Hydrojet inline aqueous and semi-aqueous cleaners.

The patent includes the drying device as well as the method of using the device in a manufacturing setting. [aat-corp.com]

Heraeus Forms Circuit Material Division

W. Conshohocken, Pa.-W.C. Heraeus GmbH has formed a worldwide Circuit Materials Division to manage the business units that serve electronics component fabrication.

The Circuit Materials Division name includes groups within the company that produce materials used in passive components manufacture, thick film and hybrids, surface mount assembly and advanced materials technology. [4hcd.com]

Building A, a 12-story building with 800,000 square feet of space, has been completed in ASE's new Chungli Intelligent Industrial Park.

ASE Opens Chungli Park Facility; Investment Represents $800 Million

Hsinchu, Taiwan-Advanced Semicon-ductor Engineering has opened the Chungli Intelligent Industrial Park, located between Hsinchu and Chiang Kai-Shek International Airport.

Construction began in 1999. When completed in 2005, the industrial park will represent an $800 million investment by the IC assembler.

The industrial park is located on 700,000 square feet of land. When finished, the park's combined facilities will offer over six million square feet of factory space. The company said construction will create as many as 20,000 new jobs.

Various members of the ASE Group will be brought together in the park, including ASE Test, ASE Material, ASE's IC packaging operation and Universal Scientific Industrial. ASE also plans to build a new R&D center in the park. [aseus.com]

IBM Topped Patents List in 2000

Armonk, N.Y.-IBM was awarded more U.S. patents last year, 2,886, than any other company. IBM has achieved the top rank for eight years running, and holds a total of 34,000 patents worldwide, and some 19, 000 in the U.S.

Big Blue, in fact, bested the next closest company, NEC, by more than 850 patents. IBM's total surpassed the combined number of patents awarded to Cisco, Dell, EMC, Oracle, Microsoft, Hewlett-Packard, Intel and Sun Micro-systems. [ibm.com]

EPA Rule Affects Lead Reporting

The IPC reports that changes by the EPA in a lead reporting rule may impact U.S. PWB suppliers and EMS companies. The rule changes the Toxics Release Inventory (TRI) reporting threshold for lead and lead compounds from 25,000 pounds/year to 100 pounds/year. [ipc.org]

ATE Interface Supply Wars: Credence Systems Buys DCI, Valley Load Board, Test Socket Maker

Jerry Qubain

Fremont, Calif.-The new millennium was barely a week old when the ATE industry's first acquisition took place: Large memory ATE maker Credence Systems snapped up small ATE interface vendor Dimensions Consulting Inc. of nearby Santa Clara.

What Credence receives for its undisclosed payment is DCI's 15 employees and entre into the high-performance load board and test and burn-in socket business.

Jerry Qubain, formerly DCI's business development director, will be in charge of the acquisition as director of Credence's new Integrated Products Group, according to Paul M. Sakamoto, vice president/GM of Credence's Memory Products Division. Qubain will report to Andrei Berar, within Sakamoto's group.

DCI acquired its socket line from Liberty Research, also in Santa Clara, only about a year earlier.

ATE interface suppliers have become hot properties over the past year. At year end, assembly equipment maker Kulicke & Soffa acquired DCI competitors Cerprobe of Gilbert, Ariz., and Probetest of Santa Clara.

The key reason behind the acquisition, Sakamoto told Chip Scale Review, is to bring Credence into closer parity with some of its more vertically integrated competitors, specifically Advantest.

"At some time in the future," Sakamoto added, "We will begin using some of DCI's capacity for Credence." The ATE maker, however, intends to continue selling part of DCI's production outside. [credence.com]

IBM, Infineon Working on MRAM

East Fishkill, N.Y.-IBM and Infineon Technologies, Munich, Germany, are jointly developing a memory technology that could "significantly increase the battery life of portable computers and lead to instant-on systems," according to a recent announcement.

The two are collaborating on Magnetic Random Access Memory (MRAM), which uses magnetic, rather than electronic, charges to store data bits.

IBM Research pioneered the development of a miniature component called the "magnetic tunnel junction" around 1974, eventually adapting it as a way to store information and to build a working MRAM chip in 1998. MRAM products could be available by 2004.

MRAM offers the potential to replace to day's memory technologies and become a de facto standard for electronic products of the future, according to Bijan Davari, IBM Fellow and vice president of technology and emerging products. [chips.ibm.com]