The semiconductor industry experienced a good year in 1999, finally breaking out of the over-capacity situation that decimated revenues for the past three years. IC revenues grew from $109 billion in 1998 to $130 billion in 1999. With supply and demand in better balance, and the world economy in apparently good condition, the stage appears set for at least two years of solid revenue growth, with most pundits predicting a small slowdown in revenue growth in 2002. The only cautionary note seems to be the large jump in overall unit volume last year-16 percent. Over the last 12 years, such robust unit growth in one year has always been followed by much more restrained unit growth in the next. As a result, ETP's overall unit growth forecast for 2000 is only 9.9 percent. The 16 percent unit growth-a total of 9.4 billion ICs-was led by low-end products. Standard analog parts-ICs with an ASP of $0.44-grew by 3 billion units for a 23 percent gain. Standard logic parts-ICs with an ASP of $0.19-grew by 2.4 billion units for a 26 percent gain. The surge in demand for these inexpensive chips was created by the recovery in the Asian market. Sectors of the Asian market, especially China, still use vast quantities of low-end chips to produce televisions and a array of other consumer goods. Many of these devices still use through-hole packages. As the semiconductor industry continues to change relentlessly, the IC package family will do likewise. The table presents the package family forecast.
Based on pricing information provided to ETP by contract package assembly companies, if all IC package assembly had been done by independent companies, the total value of that assembly would have been $18.3 billion in 1999. This represents a 13 percent increase from 1998, somewhat below the overall industry unit increase of 16 percent. Since so much of the industry's unit increase was in low-end devices, packaging revenue increase did not equal the unit increase. This revenue, however, is predicted to expand to $35.7 billion by 2004, for a 14.3 percent combined annual growth rate (CAGR). Unlike 1999, packaging revenue growth will exceed the unit growth rate over the next five years with higher leadcount, higher-priced packages guiding the way. Packaging foundries last year continued to assume a larger percentage of the world packaging market. A total of 14.0 billion ICs were assembled by packaging contractors in 1999, a number that will grow to 29.8 billion packages in 2004, for a CAGR of 16.3 percent. Last year, contractors assembled 20.5 percent of the world's IC total. By 2004, this will be over 26 percent. Contractor revenue will grow from $7.2 billion in 1999 to $16.2 billion in 2003. (These figures are for IC package assembly only and do not include other services such as test.) In 1999, contractors captured 39 percent of the theoretical world's total IC assembly revenue. By 2004, this will be over 45 percent. That these figures are both higher than the respective unit percentages reflects the fact that most assemblers seek out the high-end portion of the packaging business, especially BGAs and QFPs.
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