Sunday, September 26, 2010
There is also a turning point in packaging
The shift to copper bonding could also enable cheaper end-user products like cell phones, PCs and others, but it also has some chilling ramifications. The cheaper copper bonding process could take a bite out of margins and sales for the IC industry, meaning that the chip landscape is possibly due for another "structural change," he added. "As more customers move to copperHermes Birkinespecially leaders in the consumer and mobile markets, the competition must react to stay competitive" or they will be left behind, said Flynn Carson, vice president of technical programs at Singaporean chip-packaging provider STATS ChipPac. Rich Rice, senior vice president of North American sales for ASE, the world's largest independent IC packaging and test house, described the shift from gold to copper bonding as a "game changer." Gold-based wire bonding "won't go away, but for most applications, we see copper as a viable replacement," Rice said. He also believes that copper bonding will actually improve the overall health of the industry. Depending on the product, copper bonding can reduce overall IC-assembly costs from 8-to-15 percent, he said. And if chip makers jump on the copper bandwagon-and maintain their average selling prices (ASPs) at or near the same levels- they can actually boost their margins, he said. That is a big if and a matter of debate. There is a chance that some, but not all, chip makers will misbehave and lower their ASPs during the shift to copper bonding. Some may look to undercut the competition, fueling a price war and a shakeout in the IC industry. It could be wishful thinking, but many insist that chip makers won't demand lower prices from their IC packaging vendors by moving to copper. Others speculate that some chip makers could take advantage of the cost savings in copper and gouge their packaging vendors. Right now, there is a danger that the subcontractors may get stuck with too much copper bonding capacity amid the current slowdown. Prior to the recent lull, ASE and SPIL separately went on a buying binge of copper bonders. But in July, SPIL pushed out its bonder orders from K&S, amid a slowdown from one customer, reportedly MediaTek. But with or without copper, there are signs that the shakeout in the chip packaging market is accelerating. The big subcontractors are getting bigger and the weaker vendors are slowly disappearing. Like the silicon foundry model, there has been a dramatic shift towards outsourcing in the chip-packaging and test markets. In total, that market, sometimes referred to as the semiconductor and assembly test (SATS) business grew from $5.3 billion in 1998 to $17.2 billion in 2009, according to Gartner Inc. After declining 14.7 percent in 2009, the SATS market will expand by 37 percent this year, said Jim Walker, an analyst with Gartner, during a presentation at an event this week sponsored by the Microelectronics Packaging & Test Engineering Council (MPTEC), in Santa Clara, Calif. As reported, Gartner believes the IC market is still poised to hit record levels and grow 31.5 percent in 2010. But there are signs of a slowdown in PCs, cell phones, LCDs and other products, thereby impacting the SATS business.