July - August 1999
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New Prospects, New Problems at the MilleniumWhile chip-scale packaging is becoming a requirement at most integrated circuit packaging foundries, economic and technical issues loom heavy on the horizon.
By Ron Iscoff, Editor
As the turn of the century approaches, IC packaging foundries are facing a host of new prospects for expansion. The future, however, is not without its share of problems, some easily overcome, others somewhat labyrinthine.
The packaging of integrated circuits has become a mega-business. While there is no accurate total dollar figure available, consider that Amkor Technology, the industry's kingpin, pulled in earnings of more than $1.5 billion in 1998-the majority of which came from its packaging activities. And Amkor is only one of at least 60 independent providers of IC packaging services worldwide-albeit the largest.
Packaging ICs is not only a big business, it's also becoming increasingly complex, costly and dependent on large sums of capital for equipment and overhead.
The cost of entry, however, is apparently not perceived as a deterrent. According to our survey, nearly half of the packaging foundries that responded to our questions were started within the past 10 years.
Like most of the dizzying cycles in the semiconductor industry, when business is good for packaging foundries, it's really good, despite the always severe competition. And when business is bad it can be unusually challenging.
As chip-scale packaging takes hold industry-wide, almost all packaging foundries say they are now offering CSPs or plan to do so within the next year. Amkor, for example, offers several CSPs and near-CSPs (Table 1). Unlike the "good old days," circa 1975, when packaging foundries were dismissed as "contract assemblers," the business has gone very high tech.
IC packaging has gone from being very labor intensive to being very machine intensive, as these banks of wire bonders at IPAC show.
In most cases, it's no longer enough to simply offer packaging; today most of the larger suppliers-and a few of the smaller ones, as well-offer package design through final test and shipping on a turnkey basis (Table 2).
Kyocera America, San Diego, Calif., currently offers a variety of CSPs. "We made the decision to move into CSPs based on customer demand," according to Richard Sigliano, general manager.
CS2, one of the newest packaging foundries, (and one of the few in Europe-Belgium in this case) offers a full compliment of CSPs, according to Steve Lerner, CS2 president, who is an ex-Swire, ex-Amkor executive.
"We offer flex-based power
CSPs, traditional laminate CSPs in the outlines of LF-BGA and TFBGA, as well as ceramic CSPs," says Lerner. "CSP demand is clearly on the rise with all real-estate-intensive applications, particularly telecom. Being in Europe, telecom is perhaps the most important segment of the market," he adds.
Being new is not always a disadvantage, as Lerner points out, when it comes to buying equipment.
"Our equipment strategy from day one was to configure our manufacturing line in a way that could handle a wide variety of product types within the installed base.
"The very exotic CSPs on the market today have not gained sufficient customer popularity to warrant dedicated equipment," Lerner adds. "This is particularly true of flex-based CSPs." The flex-based packages which CS2 offers are reformatted at the substrate level to conform to existing handling and processing, such as the CUEBGA.
VLSI Packaging, Richardson, Texas, has been offering CSPs for several years, says Gene Wakefield, the company's co-president. Where needed, new equipment, which can handle a CSP's much tighter dimensional tolerances, was added, and existing equipment was modified.
George Fujimoto of IPAC's CSP development group in San Jose says, "Market conditions are driving the industry to smaller and thinner packages, and CSPs are the logical solution if costs can be controlled."
And that is part of the problem. Costs are a constant, and increasingly burdensome albatross around the neck of the packaging foundry industry. Customers expect per lead (ball) prices to continue to fall, as they have done over the past decade or so, even as packaging foundries look for ways to hold the line. When the industry is in a down cycle, price sensitivity becomes even more pernicious.
The severe competition for the packaging dollar, most observers agree, means continued per-lead price erosion, except where value-added services can overcome the downward spiral.
Chip Supply Inc., Orlando, Fla., outsources CSP assembly, according to Jim Rates, Chip Supply's director of advanced products. "However, new techniques and equipment were needed for test and burn-in. We either designed and fabricated this equipment internally or purchased it outside," Rates adds.
It appears, in fact, that another problem-and a major one-involving CSP production belongs to the test and burn-in cycle, both at the wafer-level and traditionally. The test process, for example, is a key concern with RAMBUS parts. Then add the technical problems stemming from the process changes usually required in CSP production, and stir. The resulting melange, which includes materials problems, as well, has packaging foundry executives scratching their heads for solutions.
At Kyocera America, the biggest obstacle in adding CSPs, according to Sigliano, was to develop an encapsulant material that would "snap" when singulating the CSPs. "We spent a considerable amount of energy developing this product through our organic material suppliers."
Adds IPAC's Fujimoto, in developing CSP processes, "Materials issues became apparent. As the packages become smaller, stresses within the package and on the die require a change in packaging materials. Gel/cure time for die attach and molding (encapsulation) demands new materials. Wire and substrate issues also caused us to re-evaluate those materials."
With the recent near-collapse of IPAC, until its rescue by Taiwan-based OSE, it has become obvious that the battle for the hearts and minds of United States-based customers is over. Any continuing thoughts that onshore IC packaging houses can pull the rug out from the Asian-based assemblers should be abandoned.
Now less than a handful of companies-IPAC, Pantronix in Fremont, Calif. and VLSI Packaging-account for the majority of onshore work. Even Pantronix, with a quarter century experience onshore, realized more than a decade ago that sending high-volume work to Asia was a necessity and opened the Amertron facility in the Philippines.
(Micron Semiconductor presents one of the rare contradictions to moving offshore. It typically assembles most of its ICs in Boise, Idaho, and has done so for years.)
David Francis, an industry analyst with International Interconnection Intelligence, Montara, Calif., says there are several reasons for the dearth of onshore IC packaging foundries.
"One of the reasons for onshore IC assembly," says Francis, "was to offer fast turnaround. However, this is no longer a viable reason. Overnight services are so efficient around the world that parts can be obtained from overseas almost as quickly as from onshore. And if the quantities are larger than prototypes, volumes offshore can be even faster."
Other reasons for offshore assembly are cost and infrastructure, Francis adds. "Even highly automated processes, such as wire bonding, are done offshore. Equipment must be maintained, new software written and factory overhead must still be allocated to each unit manufactured." In fact, Francis observes, "There are almost no wire bonders left in this country."
As the industry rebounds from its worst cyclical shellacking in nearly 30 years, the tantalizing prospect of wafer-level packaging (WLP) production becomes yet another issue for packaging foundries to consider.
Dr. Daniel Tracy of Rose Associates, Los Altos, Calif., agrees with most other experts: Over the near term, the impact of wafer-level processing will be small. "The vast majority of ICs will continue to be assembled in leadframe and substrate-based packages.
"End-users and board assemblers will be limited in implementing wafer-level packages by the PC board maker's ability to process boards with the fine geometries needed for interconnects," he adds.
As wafer-level packaging matures, there will be an impact on how and where ICs are packaged, Dr. Tracy notes. "If WLP is carried out in the fab, IC packaging foundries could be out of the production loop."
A more likely response, however, will be for packaging foundries to develop in-house wafer-level capabilities, Dr. Tracy believes. Alternatively, they may form strategic partnerships with either wafer foundries or bumping services to provides WLPs. One intriguing result of WLP, says Dr. Tracy, is that it may offer "a window of opportunity for North American packaging foundries to establish a more prominent market presence."
Francis of III says that if the WLP process involves only current and under-utilized wafer fab equipment, "it is most likely that the packaging function will default to the wafer manufacturer."
A WLP process that fits this category is one that employs, for example, spin-on-polyimide and thin-film-deposited metal layers that are patterned using the photoresist and chemical etching processes normally found in the fab.
However, the high cost of implementing a new wafer fab may become a factor mitigating against fabs taking over the packaging function, Francis believes. "Since new fabs are so capital intensive, they are not interested in adding the additional cost for processes with a lower rate of payback, such as wafer-level packaging."
Historically, it's easy and quite safe to predict that there are good times ahead, and soon, for IC packaging foundries.
The arrival of the $600 personal computer and soaring demand for personal electronics is once again fueling the semiconductor industry's need to make product. With CSPs no longer simply a puzzling new item in the package vendor's mix, look for packaging foundries to become the CSP's strongest backer.
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