eb-asia.com
Boom times ahead
Equipment delivery lead-times are being stretched to the limit
THE back-end chip packaging business hasn't been this busy in a long time.
The upturn in semiconductor demand has most IC assembly and test factories running to capacity. And
back-end equipment vendors can't supply gear fast enough to satisfy capital expansion programs at the chip
factories.
"We believe this momentum can carry on until the early part of next year," says G.Y. Lee, general manager
of ESEC (Asia Pacific), a Swiss-based die and wire bonder maker.
The boom times have stretched equipment delivery lead-times to the limit. IC assembly houses have the
demand "but they're not able to put the equipment in place as fast as they would like to," says Inderjit
Singh, president of United Assembly and Test Center (UTAC), one of two main IC packaging
subcontractors in Singapore.
The chip packaging crowd in the region is benefiting from two strong trends. With the growth in wafer
fabrication facilities in Singapore and Southeast Asia, the demand for back-end supporting services such as
assembly and test is growing proportionately.
On top of that, assembly and test operations are also benefiting from
outsourcing, with more integrated device manufacturers (IDMs) choosing to
use independent contractors to assemble and test their ICs. Typically, an
IDM will seek to outsource 20% to 40% of its back-end requirements, up
from around 5% to 10% a few years ago, says Singh.
On the technology side, the transition from older style leaded devices to
laminate type packages is fuelling growth in packaging equipment. Old
machines may not be suitable for some of the newer packages, meaning more
sales for the equipment vendors. The proliferation of package types also
means it's more difficult for both vendors and their customers to pick the
winning technologies. Bet on the wrong package type and it's an expensive
mistake.
"There are so many industry focus areas now, I don't know which one to
believe," says Peter Tan, general manager of Speedline Technologies Asia.
For his part, Tan thinks BGA and its variants will dominate over the next two years. Speedline, traditionally
a supplier of machines for SMT assembly, is moving into the semiconductor packaging market.
To support the growth in the assembly and test industry in Singapore and Southeast Asia, back-end
equipment vendors are improving their presence locally. At the start of this year, US equipment company
Kulicke & Soffa Industries opened a new manufacturing facility in Singapore. ESEC is boosting R&D
investment in the region while reviewing whether to re-establish its manufacturing presence in Singapore,
which was closed down in 1998 during the height of the downturn.
Both K&S and ESEC compete with Hong Kong-based wire and die bonder maker ASM Pacific
Technology Ltd, which has R&D and manufacturing operations in Singapore. Charles Vath, director of
process and packaging technology for the Singapore operation, believes that American suppliers have been
slow in coming to Asia. "If you're a back-end equipment manufacturer based in the US and you don't put
your foot in Asia real soon, you won't be able to put your foot in Asia," says Vath.
While Singapore's role as a packaging R&D and support infrastructure hub is secure, it may lose out in the
contract testing area, according to Ian Jenkins, vice president of Asia operations for Multitest Electronic
Systems (Asia), a supplier of test handlers. "General purpose test is still quite labor intensive so you'll
probably see not much growth in test in Singapore," he says. Instead, he sees the Philippines and Thailand
benefiting from the move to outsource IC testing.
If some of the business goes elsewhere, that's not necessarily bad for Singapore. A new investment in one
place doesn't necessarily mean a loss for another, according to UTAC's Singh. "I don't think that it's a zero
sum game," he says. "Some will be focusing on high-end products, some on low. Southeast Asia has the
opportunity to be the next Taiwan |
