BY SANTOSH KUMAR AND MARIO IBRAHIM, YOLE DÉVELOPPEMENT
Amidst a dynamic ecosystem, the semiconductor supply chain is undergoing change at various levels. Some players have successfully managed to expand into a new business model and significantly impact the IC manufacturing chain, while others have failed to take off.
Different players have different motivations to move or expand into new businesses. Yole Développement (Yole) identified, for exam- ple, software players like Google, Microsoft, Facebook, and Alibaba. Such companies are designing their own processors in order to have system-level integration/ customization and control of the supply chain up to assembly level.
The biggest change is marked by foundries expanding into the advanced packaging business. Though they are relative newcomers, their impact has been significant.
TSMC leads for innovation in the fan-out and 3D advanced packaging platforms, with various offerings such as InFO (and its variants), CoWoS, WoW, 3D SoIC, and more. For TSMC, advanced packaging has become a full-fledged business, and the company expects US$3 billion revenue from its advanced packaging activities in 2019, which would put place them fourth among OSATs.
Elsewhere, UMC is a key supplier of Si interposers for 2.5D packaging, and recently partnered with Xperi to optimize and commercialize ZiBond and DBI technologies for a wide range of semiconductor devices. Meanwhile, XMC provides 3D IC TSV packaging for image sensors and high-performance applications. Overall, these players are instrumental in moving packaging from substrate to a silicon platform.
IC substrate and PCB manufacturers like SEMCO, Unimicron, AT&S, and Shinko are entering the advanced packaging arena with panel-level fan-out packages and embedded dies (and passives) in organic substrates, and are eating the lunch of OSATs – especially those involved in the advanced packaging business. EMS companies such as Foxconn, Jabil are developing assembly / packaging capabilities and are expanding into the OSAT’s business domain to improve their profit margin and move up the value chain. Foxconn provide the RF SiP packaging services for Avago FEM andmodule assembly for various OEMs. Jabil acquired Kasalis which is the manufacturing system for the active alignment, assembly, and test of compact opto-electronic devices.
To remain competitive, lots of M&A will take place in the OSAT sector in the coming years, at various levels: consolidation amongst big players, the merger or acquisition of two midsize players with complementary services offerings (i.e. between pure packaging and testing players), and small OSATs (or WLP houses) being acquired by big players. Niche WLP players like Deca Technologies and LB Semicon are strong candidates for acquisition.
In addition, the trade tension between the U.S. and China could potentially disrupt semiconductor growth and cast uncertainty over the supply chain. The picture is still unclear and there is lots of confusion, intermingled with many “ifs” and “buts”. Multiple scenarios are today possible depending on whether there is an all-out trade war or if a new trade deal is reached, either with concessions from each side or the status quo being maintained. It is also possible that this trade war will see as- sembly supply chains shifting from China to Taiwan, Korea, and Southeast Asia.
Once the traditional domain of OSATs and IDMs, a paradigm shift is occurring today in the packaging/ assembly sphere. Players from different business models including foundries, substrate/PCB suppliers, EMS/DMs, are ar- riving and cannibalizing OSATs’ share.
All in all, there is a lot of moves within the advanced packaging industry. Yole and its ad- vanced packaging team, in collaboration with System Plus Consulting, specialized in reverse engineering & costing, will definitely keep a close eye on this industry and its impressive changes.
Santosh Kumar, Principal Analyst & Director, Packaging, Assembly & Substrates, Yole Korea, Mario Ibrahim, Technology & Market Analyst, Yole Développement, and Favier Shoo, Technology & Market Analyst, Yole Développement
