May - June 1999
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The Glass is Finally Filling Up: IC Packaging Foundry Sales Improving
By Harvey Miller, Contributing Editor
The business pace at IC packaging foundries is finally picking up, even as margins are under pressure. The two leaders, Amkor and ASE, illustrate the pattern. Together they account for $2.1 billion in sales at their current annual rate (excluding wafer fab)—about half the foundry market. Amkor went flat sequentially in Q1 1999, but units were up. This was due to price attrition of QFP and TSOP packages, which are rapidly maturing.New design generations and new end-market products are opening doors to the new packages with their higher average selling prices. We estimate that array packages will double to 3.5 billion units this year.
ASE (Taiwan) bought 70 percent of ISE Labs for $98 million, and OSE bought 75% of San Jose-based IPAC—a harbinger of more Taiwan capital moving this way, which contrasts to Korean interests selling off equity (Amkor and ChipPAC).
It all begins with end-market growth where perspectives are vast. Examples follow:
Peace breaks out between Ericsson and Qualcomm as they move from enmity to alliance. The "treaty" (March 25) was very far-reaching: (a) complete cross-licensing of Code Division Multiple Access (CDMA) patents, (b) freedom by Qualcomm to offer resulting ICs to all customers, (c) one CDMA global standard for G3, next generation wireless, and (d) Ericsson takeover of Qualcomm's CDMA base station factory in San Diego. There is a new Industry will: Standards differences will not be allowed to stand in the way of market development.
Prediction: Development of dual protocol chips, GSM-CDMA, to make world roaming a reality, will provide an enormous new boost to wireless markets.
That's after the more immediate boom sparked by the new agreement eliminating CDMA protocol confusion.
Which brings us to mixed signal ICs and the even more all-embracing systems-on-chip, overlapping concepts facilitated by under 0.25 micron lithography and copper-chip interconnects.
They will make possible single, multi-protocol cell phones and low-cost global positioning satellite chips. An example of the impact on printed circuits and interconnection was provided recently in an on-going lecture series on SOCs at Stanford University.
Dr. Vijay Nagasamy, engineering director of Mitsubishi's VSIS, told of an SOC (processor + DRAM) implementation that reduced leadcount from about 200 to 60 and reduced PC board area by more than 30%. We'll keep you informed about SOCs.
Definitions: MSICs are chips which combine two or more different technologies, such as analog, digital CMOS, RF, bipolar. SOCs are complete systems or subsystems on one chip. They may use MSICs or implement different functions with the same technology.
A Fall from Grace
Re-inventing prematurely-old companies is another category replete with positive implications for the electronics manufacturing infrastructure. Consider the sudden fall from grace of such recently revered companies as HP and Compaq.
Now they must follow the example of IBM which began its reinvention six years ago in April 1993.
IBM's first step was the acquisition from RJR-Nabisco of "cookie salesman" Lou Gerstner, who brought a new focus to core strengths—mainframes, disk drives, semiconductors, notebooks and circuit interconnections.
New hardware products will roll as the reinvention process spreads. Some will stimulate large markets, such as voice recognition, music downloads and games.
New Allies
Achem (Asia Chemical Co., Taiwan) allied with Daiwa (Japan) at PC Expo to unveil a new HDI technology for building microvias at PC Expo '99. A third partner will probably be a U.S. PWB company that will bring the technology to market.
Some interesting features: Low capital investment—no laser for 4-mil vias in buildup layers, solid-stacked copper post from layer 1 to any internal layer.
The drilling method is undisclosed for now.
IBM's design center at Yamato was incorrectly identified in the April-May issue. Yamato's contributions to the one-inch 340 MB micro drive module and its chip-scale electronics is characteristic of many. The Thinkpad was another.
Harvey Miller is a longtime observer of the electronic packaging industry and is editor of InfraFOCUS, an industry newsletter in Palo Alto, Calif. Contact him at hmiller560@aol.com, phone 650.327.2029.