Before 2001, IC packaging foundries saw their business grow at an outstanding rate (see the table). But last year's unprecedented downturn was especially difficult for the packaging foundries, reflected in the drop in units and revenues for 2001. As a result, most players in this area have downsized their workforce to some extent. Additionally, some of the weaker companies have gone out of business or have been acquired by the stronger players. What Happens Next? While the economic outlook has been grim for over a year, the good news is that the economy-and with it the semiconductor industry-seems to be picking up. While it's not growing by leaps and bounds, the economic situation has at least turned the corner. As one pundit opined, "The bleeding has stopped." A cautious approach to growth at this point-which is what most of the players are taking-is probably best, since any wild upturn would certainly be followed by a downturn, continuing the cyclical nature of this industry. ETP's recent survey of the industry indicates that no one is looking for the days of 30 percent annual unit growth now or at any time in the near future. Still, the industry will continue to grow at a healthy rate. For companies who want to expand their capacity, now may be a good time to look at mergers and acquisitions as a path to expansion. Those companies with extra cash or good credit may be able to take advantage of relatively inexpensive deals.
Many of the industry's leading companies have been involved with mergers and acquisitions for some time. Amkor Technology has been actively acquiring smaller companies for several years, buying King Yuan Electronics, Sampo and TSTC. Recently, the assembly giant announced plans to acquire the assembly business of Citizen Watch. The Citizen acquisition will give Amkor a new avenue into the Japanese market-possibly a indication of things to come for the beleaguered Japanese semiconductor industry. Advanced Interconnect Technology (AIT) has been active with mergers and acquisitions for quite a while. These include a name change from Astra Micro-tronics Technology, with the acquisition of portions of Hana-specifically, Hana's Hong Kong facilities that had once belonged to Swire-and the Manteca facility that had once been Olin Interconnect, a producer of metal packages. Test Facility Acquisitions AIT's latest acquisitions include test facilities Multitech Design and Test in Sunnyvale, Calif., and Semiconductor Services in Austin, Texas. These additions will expand AIT's ability to offer wafer probe and final test. OSE (Orient Semiconductor Elec-tronics) expanded onto U.S. shores several years ago by purchasing the former IPAC, San Jose. IPAC is now known as OSE USA. This acquisition gave OSE access to the U.S. financial markets, and the ability to offer quickturn services domestically. In a reversal of the normal acquisition flow in the semiconductor packaging industry, Eurasem-which offered local assembly on the European continent-was purchased by ELMOS Semiconductor for use primarily as an internal source of packaging capacity. The willingness of the industry's leading players to expand their services through acquisitions shows that they believe the semiconductor packaging industry is still attractive. Given the lowered growth expectations of many of the industry's players, mergers and acquisitions may be a better path to profitable growth than internal capacity expansion.
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