Packaging Materials Face Supply Pressures
Aaron Hand, Managing Editor -- Semiconductor International, 2/15/2006
Getting a sense of the drivers behind the semiconductor packaging industry, one need only take a quick look at the latest iPod. Like the rest of the semiconductor industry these days, packaging is increasingly influenced by the consumer market. The incredible thinness of an iPod will likely be followed by comparably thin cell phones, according to Jan Vardaman, president of TechSearch International Inc. (Austin, Texas). “Do you have any idea of what that means for the package?” It’s driving all the packaging developments, she said, changing how semiconductor devices are thinned, die attached, bonded and encapsulated.
Vardaman was speaking at this year’s ISS Europe conference in Amsterdam on Tuesday, detailing the materials market in the semiconductor packaging arena. If you take a closer look inside an iPod, you could see that underfill predominates. “It’s because, if you drop it, you still want it to work.”
Another thing you may notice inside the iPod is the diversity of package types. The day earlier at ISS Europe, Jon Lanson of Amkor Technology had shown some slides detailing a great number of package types available from his company. Vardaman mused that most people might wonder why anyone would need to have so many different package types. But the answer, as shown in today’s consumer electronics, is that the packages must fulfill so many different types of functions. Mobile phones and digital cameras, for example, contain several chip-scale packages (CSPs), including wafer-level packages, stacked die and systems-in-a-package (SiPs).
Advanced packages (defined as BGAs and CSPs) have seen a great deal of growth lately – in turn driving much of the revenue growth, as well as the unit volume, in the packaging sector. About 19 billion advanced packages were shipped in 2004, accounting for 18% of the semiconductor packaging market. That’s expected to grow to 37% in 2009, with 53 billion units shipped.
Increasingly, advanced packages use a lot of laminate substrates. Memory packaging, for example, has been typically dominated by TSOPs, but has now switched to laminate substrates. So the laminate substrate market is growing, while leadframes are expected to stay flat through 2008. Because laminate substrates are relatively expensive – $6 to $20 per substrate, Vardaman said – this trend is having a significant effect on the materials market numbers.
The packaging materials market has been besieged by increasing prices and materials shortages. High energy costs have played a role in increasing materials costs not only because of the energy required to produce the materials, but also the fact that some materials are oil byproducts.
The industry has seen a shortage of green materials, affecting prices there. With the switch to lead-free, solder balls have become more expensive. However, Vardaman expects the higher prices to erode over time for lead-free.
Also, the fire at ASE’s facility in May last year had a significant impact on the industry – decreasing the flip-chip substrate capacity just when demand was also growing. It’s a shortage that has managed itself with high prices or longer leadtimes, Vardaman said. In a panel discussion with other analysts later in the day, Vardaman pointed to the ASE fire as the one surprise that had the most impact on her market last year, saying that it “toasted capacity.” ASE represented a good percentage of the world’s assembly capacity, she explained. Part of its effect was that it allowed several back-end providers to finally pull out of a spiraling trend, and start increasing their prices again. Flip-chip substrate prices were expected to fall 10-15% in 2005, but instead have increased.
Another supply shortage was caused by the drop in profitability in wire bonding, which encouraged companies to get out of the business, thus creating the shortage. Plus, the ASE fire decreased capacity for wire bond PBGA substrates as well.
The question that all these developments begs is who’s going to be able to pay for the R&D in electronics packaging materials? Perhaps there will be a bigger role for the consortia, Vardaman said. With the impact of energy prices, as well as the rising price of raw materials such as gold and copper, she later noted that the packaging market is in a different era now. “You can put all the pressure you want on prices – get over it, purchasing folks; it isn’t going to happen.”
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