Packaging: Weathering the Downcycles
The advanced semiconductor packaging industry has learned how to weather the downcycles and is busy looking ahead to a better year in 2010, said Jim Walker, vice president of semiconductor manufacturing research at Gartner Inc.
Sally Cole Johnson, Contributing Editor -- Semiconductor International, 11/17/2009
With the forecast for packaging improving in 2010, business strategy is shifting toward more partnerships and joint ventures. And the focus on through-silicon vias (TSVs) is rapidly accelerating and may result in even more partnerships and joint ventures between foundries and packaging houses.
There's no question that the packaging industry has learned how to weather downcycles. "They adjusted very quickly to the ramp in terms of inventories and production. Back in January, utilization rates were down around 30% — they were really low. But since that time, they've been coming back up and depending on which package is being produced, there are some packages that are almost at full utilization again," said Jim Walker, vice president of semiconductor manufacturing research at Gartner Inc. (Stamford, Conn.). "The advanced packaging and flip-chip and bumping lines are doing well. A variety of semiconductor companies are doing a little better than expected right now, so it just goes to show that we as an industry adjusted very quickly and learned from the 2001 crunch. Q3 and Q4 are looking good in relation to the total economy."
Gartner's earlier forecast was that worldwide packaging and assembly equipment spending would decrease 43.1% in 2009, then increase 40.5% in 2010. This recovery began in Q2 of 2009 as the market bounced off its sharp correction in Q4 of 2008 through Q1 of 2009. Walker expects the forecast for the packaging services market, down -9.9% in 2009, to get bumped up a bit when they run the final numbers for the Q4 forecast. And he believes next year will look much better. The semiconductor industry is on track for 10% or possibly greater growth in 2010, with foundries faring better at 17% growth, and the packaging industry up ~20%. "Capital spending should be up around 30-35% as well, so 2010 looks to be a very good year," he noted.
Wafer-level packaging (WLP) and TSVs are still driving the packaging industry from a technology standpoint. PCs are making a stronger-than-anticipated comeback, and smartphones are also doing well in sales, Walker pointed out. These are the two key factors currently driving units. And units drive packaging, so he's seeing a fair amount of growth, consistent on a monthly basis, year over year.
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These void-free copper posts fill vias with dimensions as small as 30-500 µm in diameter. (Source: Allvia) |
Business strategy is changing
Much closer relationships are being established between contractors and their customers these days. Especially the IDMs who have their own packaging facilities, but shop their business much more competitively than the fabless companies, according to Walker. He's noticing IDMs trying to establish long-term relationships with the different contractors and not changing to save a few pennies — a huge change from the past. They're more interested in maintaining longer-term relationships and forming real partnerships, which is a change in business strategy.
"We're seeing much closer relationships being developed and customers are staying with their suppliers longer," Walker noted. "One new thing is that they're looking for financial stability in partners. There's a shift away from looking for the best price and just shopping around. For the most part, semiconductor companies are starting to partner. The thought process has changed so that now they're thinking of a packaging company as an extension of their own internal factory or production capability." That's a big switch from thinking they can keep suppliers at arm's length, then pull out at any second and go to a competitor.
And the industry is seeing more joint ventures in general. One example: Amkor (Chandler, Ariz.), Nakaya Microdevices Corp. (Oita, Japan) and Toshiba (Tokyo) formed a joint venture called J-Devices to provide assembly and test services in Japan.
TSVs blur boundaries
As the semiconductor industry focuses on TSVs, there is an increasing blurring of boundaries between the front and back end. Fabs are becoming more interested in packaging processes, especially with WLP and TSVs. "It's necessary for fabs to look at the packaging aspects of TSVs, because the via-last approach, even though it's a fab process, is more packaging-oriented. We're seeing an overlap between packaging, as we become more advanced in flip-chip and wafer bumping and WLP and TSVs," Walker said. "The definitive areas between packaging and the foundry are becoming more blurred. I won't be surprised long-term to see a foundry form more joint ventures with a packaging company or even buy one. We could even see that within a year."
ASAT (Milipitas, Calif.), for example, is up for grabs. In September, ASAT announced that it was exploring its strategic alternatives. The company, which provides package design, assembly and test services, has a world-class manufacturing center in Dongguan, China. The facility has the potential for a large expansion, according to Eric Thompson, chief restructuring officer and CEO at ASAT.
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