Sales of IC assembly services (excluding test, board assembly, and discrete assembly sales by the independent companies listed in the table will approach $8 billion this year. By comparison, the potential total available market in 2000 will be $28.5 billion, which is now more than two-thirds captive. A static analysis indicates more than a potential tripling of independent sales, however.
The leader among independents for more than two decades continues to be Amkor Technology Inc. (Figure 1). Last year, Amkor's revenue, most of which is from IC assembly and test, neared $2 billion (Figure 2).
Growth The actual growth path of the independent sector will be influenced by many factors, but increased penetration of growing markets is the most important. The assembly investment picture is mixed between captive and independent sectors. But we believe that long-term trends will favor outsourcing by IC manufacturers with fabs and not only to the obvious fabless customers. A prime example was the offloading by Motorola to ASE, Taiwan, of major assembly operations. Even large IC companies need to reorganize sometimes for a better position in highly competitive, fast changing markets. The competitive markets squeeze margins. The IC companies then turn back to their design and fabrication core, outsource package assembly. As fab capacities are strained to meet demand, fab expansion will be the primary thrust of semiconductor makers. IPO prospectuses, such as those from Amkor and STATS, point out other factors for relying on an independent assembler, such as
But a most important factor in the growth of the independents and their share is the endorsement by the investment community, evidenced by those very IPOs, plus large private capital placements in ASAT, ChipPAC, etc. Some very large bets are being placed on that independent multibillion-dollar market potential. They will be self-fulfilling as the independents rise to the challenge of proving superior cost-effectiveness and better turn-around time than their captive competition. IC packaging is a cauldron of activity, focused on the independent sector. The best evidence of this activity is the flow of capital and people into the independent sector.
The new packages and capabilities offered by independent assemblers are a further testament to the growing importance of the independents. These developments are discussed in the context of company profiles that follow alphabetically: Advanced Interconnect Technologies AIT is a reborn combination of AMT ($150 million in PDIP, SO, QFP) + Hana Technologies HK ($150M in BGA, CSP) with new financing from Texas Pacific and Blum Capital. TBGAs will be a major thrust. Advanced Semiconductor Assembly Technologies ASAT is the independent parent of the very important TBGA ("tape" BGA) package and still the market leader (see sidebar). Most of the people developing TBGA packages at other independent packaging companies migrated from ASAT. ASAT is half owned by QPL, traded in Hong Kong. A group headed by Chase owns half. The relatively low unit count reflects concentration on high-end packages. Advanced Semiconductor Engineering ASE, Taiwan, is changing its previously recalcitrant image. This may be attributable to its new president, Leonard Liu, who served at IBM and Acer, where he learned that a little publicity goes a long way. Overtaking Amkor will require friends and partners (and lots of money). ASE was co-founded by Ralph Duceour, who later founded what is now AIT and remains at the helm there. The company is a major supplier to Motorola after acquiring much of its assembly capacity in Taiwan and Korea. There is a close relationship with Taiwan Semiconductor Manufacturing Company that gives the company entrÚe to a host of waferless fab companies for assembly services. The large, non-assembly component is comprised by test and assembly, including unbranded notebook computers and motherboards. ASE owns 70% of U.S.- based ISE Labs, with test in San Jose and assembly in Manteca, Calif. ASE trades on the Taipei exchange. Amkor Technology Inc. This company was the marketing arm of Korea-based Anam Industrial Company Ltd. Along with Anam, Amkor has been the independent pioneer on many fronts. Both, incidentally, share the same chairman, James Kim.
The industry leader in assembly, Amkor is now a wafer foundry operator as well. That helps to meet the competitive challenge of Taiwan and Singapore competitors that derive much package assembly business from tie-ins with TSMC and Chartered Semiconductor. With $2 billion in sales of IC package assembly, Amkor controls about 20% of the independent industry-a fragmented industry with one non-dominating leader, which is among the characteristics of a young industry. Amkor is traded on the NASDAQ as AMKR. Its IPO in 1998 raised half a billion dollars, which has been quadrupled by other financing. Chairman Kim and President John Boruch have created a successful company and launched an important new industry.
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