By Dr. Subash Khadpe, Semiconductor Technology Center, Neffs, Pa. Packaging foundries have come a long way since the days when they were little more than glorified sweatshops for independent device makers (IDMs) in the 1960s, '70s and '80s. Today, the packaging foundry is a turnkey partner, providing everything from design support to characterization, simulation, assembly, test, burn-in, drop-shipping and supply-chain management. The packaging foundry business is truly international. The more than 80 packaging foundries in operation today are spread all over the globe-although they predominate in Asia. Furthermore, packaging foundries are no longer treated like Rodney Dangerfield; now they do get respect! Today, Amkor Technology, the leader, is bigger than all but eight IDMs in the U.S., with revenues of $2.39 billion last year. When Amkor talks, everybody listens! Historical Perspective: The Pioneers Who were the pioneers of this industry?
Table 1 shows the companies that changed the world with their inventions and/or pioneering spirit.
The Market Let's look at the broad picture first. Accor-ding to IC Insights, Scottsdale, Ariz., the worldwide electronic equipment market in 2000 was valued at $955 billion and the semiconductor market was $203.2 billion. The integrated circuit market was 175.7 billion; the semiconductor equipment market was $51.8 billion, and the materials market was valued at $28.1 billion. The total number of semiconductors sold were 373.8 billion, of which 86 billion were ICs. How big was the packaging foundry market? Who were the key players? According to my calculations, the packaging foundry market worldwide last year was valued at about $10 billion.
Table 2 shows the top 10 packaging foundries in the world for 2000. Amkor Technology of the U.S. was the largest, with assembly and test sales of $2.01 billion. Taiwan's ASE Group was second with A&T sales of $1.625 billion (at NT 31.26/ $1) The top 10 accounted for $6.8 billion, more than 65% of the total worldwide market.
The next tier of packaging foundries, those with sales of more than $50 million, includes alphabetically, Amertron/ Pantronix of the Philippines/U.S., EEMS of Italy, Fujitsu Tohoku Electronics of Japan, Hana of Thailand, IBM Microelec-tronics of the U.S., Lingsen of Taiwan, Mitsui High-tec of Japan, NSEB of Thailand, PSI Technologies of the Philippines, Shinko Electric of Japan, Signetics of South Korea, Unisem of Malaysia and Walsin Advanced Electronics of Taiwan. Key Players by Region Which countries have the most packaging foundries? Who are the key players in each country? And which regions are the largest in terms of packaging foundry production, regardless of company headquarters? Before we go any further, we have to define exactly what a packaging foundry is. With the advent of flip-chip technology, wafer bumping and wafer-level packaging, it's hard to separate someone like Flip-Chip Technologies, which offers contract wafer bumping as well as wafer-level packaging with its UltraCSP, from a traditional chip-and-wire packaging foundry. If you include wafer bumping/wafer-level packaging foundries, then you have at least another 25-30 players. But this time, I'll exclude them and talk only about traditional packaging foundries. Taiwan currently has the largest number of packaging foundries, more than 40 at last count. Japan is next with more than 10, followed by the Philippines with at least 6 and the U.S. with at least 5. (An asterisk by a company that has offshore sites indicates that the starred location is the principal one and typically the company's headquarters location.) The key players in Taiwan (with revenues of about $100 million or more) are *ASE, ASE Test, ChipMOS, Lingsen Precision, *OSE, SPIL and Walsin Advanced Electronics. Caesar Technology has been acquired by SPIL. Amkor, at presstime, had just acquired its first packaging foundries in Taiwan. The key players in Japan include the new Amkor Iwate Co., Citizen Watch Co., Fujitsu Tohoku Electronics, Hitachi Hokkai, Hitachi Tokyo Electronics, Kyocera, Mitsui High-Tec, Rohm, Shindo Company and Shinko Electric. The Philippines offers ASE, Amkor, ATEC, OSE, PSi Technologies and Team Pacific. The key players in the U.S. include Amkor, with plants in China, South Korea, the Philippines, Taiwan and Japan, and a pilot line in the U.S. ChipPAC (formerly Hyundai's Assembly & Test Division) operates plants in South Korea and Malaysia and a pilot plant in the U.S., IBM Microelectronics operates a plant in Bromont, Canada. Pantronix operates a plant in Fremont, Calif. The same owners operate Amertron in the Philippines and a new plant in Shanghai, China. IPAC in San Jose is now majority owned by OSE of Taiwan. South Korea has Amkor, ASE, ChipPAC and Signetics. Malaysia boasts Carsem, the second-largest packaging foundry in the world in volume, ASE, ChipPAC and Unisem. Singapore is the home of STATS and UTEC, while Hong Kong is home to ASAT and to part of AIT (the part acquired from Hana Semiconductor). The balance of AIT is on the Indonesian island of Batam. Thailand has Alphatec and NSEB, while Indonesia is home to AIT and to Omedata. The scene in Europe is sparse. Belgium is the headquarters of CS2, currently under creditor's protection by the court. Italy offers EEMS, acquired from Texas Instruments several years ago. In the UK, you will find Atlantic Technology, acquired from ASAT in a management buyout. Eurasem continues as a niche producer in the Netherlands. On a production volume basis, the three largest suppliers are Taiwan, Malaysia and South Korea.
Technology and Market Trends The Japanese used to call it "kai-haku-tan-sho," short, thin, light and small. The Internet and the mobile revolution are driving packaging toward the smallest, thinnest, lightest, fastest and the cheapest packages and products. At the same time, bandwidth requirements are driving the technology toward optoelectronics and micro-electro-mechanical systems (MEMS), which require a totally different set of leaded hermetic packages-much like going back to the 1960s and 1970s packages. Then there's the flip-chip proliferation, both at the high end and the low end, which is changing the design rules from peripheral pads to area-array pads. Flip-chip, in fact, is creating a whole new set of wafer bumping and redistribution foundries. Add to that the growing trend toward wafer-level packaging, and you now have a convergence of the front-end and the backend-not to mention system-on-a-chip (SOC) and System-in-Package (SiP), where different types of devices (mixed-mode) are integrated in one block. This block can be a multichip package or a 3D-type stacked package. This convergence of technologies is creating a host of new packages and processes which the IDMs can no longer develop themselves because of shortages of money, personnel or simply experience. IDMs have turned to the major packaging foundries to help them out. And no wonder, the big foundries have many experienced packaging engineers working for them. New Funding One source of new funding for packaging foundries has been the equity markets. Unlike a decade ago, when there was not a single public packaging foundry listed in the U.S., now there are at least seven, with more waiting in the wings. The list includes seven out of the top 10 players-Amkor (Nasdaq), ASE Group (ASE on TSE/NYSE and ASE Test on Nasdaq), SPIL (Nasdaq/TSE), ChipPAC (Nasdaq), ASAT (Nasdaq), STATS (Nasdaq/Singapore Stock Exchange) and OSE (Taiwan and IPAC on Nasdaq BB). PSI Technologies is also listed on the Nasdaq, while CS2 is listed on the European EASDAQ. The IPOs have allowed the packaging foundries to hire the best packaging engineers and develop a host of new packages, such as BGAs, CSPs, stacked packages, multichip packages, flip-chip packages and a variety of thermally enhanced, as well as flex-based packages. Test is another area getting much more recognition than in the past. More and more customers are looking for a complete solution rather than piecemeal services with numerous foundries. As a result, most of the major packaging foundries are expand-ing their test-related activities by acquiring smaller companies in the business. Hot Packages There's no doubt that BGAs/CSPs are the hottest products today and are growing much faster than the older packages. Multichip packages/modules are also expected to grow much faster than SOPs, QFPs and PLCCs. Most of the major packaging foundries are now deriving more than 30% of their revenues from these advanced packages. IC Insights expects BGAs to grow from 2.5 billion units in 2000 to 18.3 billion units in 2005, and CSPs to grow from 1.1 billion units in 2000 to 10.8 billion units in 2005. Flip-chips are also growing very fast, but from a much smaller initial base. They require a different infrastructure-bumping, redistribution, repassivation, underfill, testing, etc. It would be difficult for most of the packaging foundries to develop the required processes themselves. So they are licensing the various pieces of the technology from companies like Flip Chip Technologies, Fujitsu, Pac Tech, Unitive and others. Amkor's SiP is said to be doing very well in the market. Stacked BGAs/CSPs are also in demand for what the Japanese call "merged-function" applications. Each major player has its own set of proprietary packages, for example ASAT's TAPP family.
Packaging Materials The proliferation of BGAs/CSPs, flip chips, SOC and LCDs has led to a huge market for advanced packaging materials-organic and ceramic carriers, tape/flex carriers, underfill materials, molding materials, build-up substrates, solders, bump materials, etc. Mix in the new environmental requirements, and you have the need for Pb-free solders, halogen-free molding compounds, etc. The leading packaging foundries are able to work closely with their materials suppliers and develop new materials and processes because of their enormous buying power. The Future Looking at the future, there's no stopping the outsourcing trend in every segment of the food chain. The big foundries will get bigger and acquire some of the smaller players. IDMs will continue to focus on design and marketing, and look to the packaging foundries for new package developments. Slowly but surely the old 75/15 or 80/20 formula will no longer apply, as it will become increasingly difficult for IDMs to compete with packaging foundries because of their diminished economies of scale. Some, following in the footsteps of Intersil, Motorola and Toshiba, will look to divest their captive backends by partnering with the likes of Amkor, ASE and others. Merging Functions It's also likely that the first- and second-level packaging functions will eventually merge at the EMS domain. If more OEMs hand over the total product responsibility to their EMS partners, as in the recent example of Ericsson and Flextronics, it is possible that many of the developments needed to complete the design and manufacturing of the product for optimum performance, reliability, etc., would require the EMS company to develop new materials, equipment and processes, such as wafer-level packaging and integrating embedded passives at the board-level. In effect, this would remove many of the functions carried out by packaging foundries, and could lead to large EMS companies, such as Celestica, Flextronics and Solectron acquiring major packaging foundries. China: A Clear Trend On a worldwide basis, another clear trend is the growth of the Chinese market which is attracting many of the big IDMs and packaging foundries to China. One thing's for sure: This industry is alive and well, and will keep growing despite the down cycles. Flip-chips, wafer-level packaging, multi-chip packages/ modules, stacked packages and optoelectronics/MEMS packages will require an enormous amount of additional infrastructure and the investment and resources to get it done. The future looks bright!
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