Good or bad news!?!?
(COMTEX) B: Taiwan's packaging, test, and assembly specialist seeks to overtake Amkor.
-- ASE Sets Its Eye On The Top
Feb. 04, 2000 (Electronic Buyers News - CMP via COMTEX) -- At a recent
event, Leonard Liu, president of Taiwan's Advanced Semiconductor
Engineering Inc., made some bold predictions for the world's
second-largest IC packaging, test, and assembly company.
Liu, who joined ASE late last year after stints with Acer Inc. and
IBM Corp., stated that the company is no longer satisfied with being
No. 2, behind Amkor Technology Inc., West Chester, Pa.
"[Amkor] is still bigger in pure assembly," Liu said, "but our aim is
to be number one."
But ASE, based in Kaohsiung, still has some distance to travel before
it can surpass Amkor. The Taiwan company is roughly half the size of
its U.S. competitor in terms of overall IC packaging revenue, analysts
said.
To further close the gap, ASE has embarked on an aggressive strategy
to become a major one-stop shop for manufacturing services-a series of
moves that reportedly is making Amkor a bit nervous.
In the last year alone, ASE has significantly expanded its production
capacity and made several major acquisitions, including the purchase of
Motorola Inc.'s IC packaging and assembly facilities in Taiwan and
Korea.
As a result, ASE now has a sprawling empire of IC packaging and
assembly operations in four Asian nations: Korea, Malaysia, the
Philippines, and Taiwan. The company also boasts separate IC test and
machine-tooling subsidiaries.
Further, in an effort to become a one-stop service shop, ASE recently
entered the contract electronics manufacturing business by acquiring a
Taiwan-based PC assembler.
Citing huge demand for both its IC assembly and CEM services, ASE
reported that its revenue has nearly doubled, from $660 million in 1998
to $1.1 billion in 1999.
ASE's customers are among those who are impressed with the company's
performance. For example, SiberCore Technologies Inc., a Kanata,
Ontario-based start-up supplier of packet-data chips, didn't hesitate
to select ASE for its packaging requirements.
"We looked at a number of companies for our packaging needs,
including ASE, Amkor, and others," said Steve Kornachuk, SiberCore's
vice president of engineering. "But ASE had the BGA packaging
technology we needed. We're also impressed by their response time."
Company origins
Indeed, ASE has come a long way in a short period. Its origins trace
to 1984, when it began offering low-end assembly services and simple
PDIPs. At that time, Taiwan's chip industry was just getting off the
ground.
During the 1990s, Taiwan's electronics industry began to earn some
respect, especially its PC and chip makers, notably wafer-foundry giant
Taiwan Semiconductor Manufacturing Co. Ltd.
ASE also became a force during the 1990s, thanks, to a degree, to
TSMC. In the early part of the decade, ASE forged an alliance with
TSMC, through which the two offer customers a seamless one-stop service
shop.
TSMC provides the front-end IC manufacturing services for chip
makers. Then, the wafer foundry refers its chip customers to ASE, which
provides the packaging, assembly, and testing.
Today, ASE provides these services for customers other than TSMC's,
including Advanced Micro Devices, IBM, Motorola, NEC, and Philips.
To accommodate the growing demand for its services, ASE in the early
to mid-1990s expanded its manufacturing operations near its
headquarters in Kaoh-siung, a bustling city in southern Taiwan that
boasts one of the world's busiest shipping ports.
But at that time, the island's labor rates began to soar, prompting
many local electronics companies to set up factories offshore. ASE
established packaging plants in Malaysia and the Philippines.
In 1999, the company began an acquisition spree to boost capacity.
Early in the year, it acquired two of Motorola Inc.'s IC packaging and
assembly facilities, in Chung Li, Taiwan, and Paju, South Korea.
The Chung Li plant, established in 1985, packages and assembles chips
for communications, automotive, consumer, and other applications. The
facility, which generated 1998 revenue of $200 million, has about 1,400
employees.
The Paju plant, established in 1997, has about 1,000 employees.
Revenue in 1998 totaled $80 million.
Last March, ASE became one of the world's largest providers of IC
testing services when its subsidiary, ASE Test Inc., acquired 70% of
the outstanding shares of ISE Labs, a San Jose-based provider of IC
evaluation and testing services. ISE also offers a number of services,
including test-program development, wafer sorting, and failure
analysis.
Then, late last year, ASE entered the CEM business by taking a
controlling interest in Universal Scientific Industrial Co. Ltd. ASE,
which had held a 6.3% stake in USI, acquired another 25%, giving it a
controlling interest under Taiwanese law.
USI, one of Taiwan's largest CEMs, supplies PC motherboards to IBM
Corp. The company, based in Nan Tou, also makes discrete ICs, passive
components, and other products.
With these acquisitions, coupled with the TSMC alliance, ASE has
achieved its goal of being a one-stop shop for OEMs, according to
Gregory Lin, president of ASE Materials Inc., the machine-tooling
subsidiary of ASE. "We want to offer our customers a total solution,"
he said.
Packaging and assembly capabilities
ASE's IC assembly production capabilities are enormous. In 1999, it
packaged and tested about 50 million chips a day, Liu said. This year,
the company intends to increase its packaging capacity by about 31
million chips a day, he added.
Much of this expansion is taking place in Motorola's former plants in
Taiwan and Korea, according to Liu. In these plants, ASE will provide
back-end services for Motorola and other customers, he said.
ASE's customer base is changing from a mix of smaller, fabless design
houses to a collection of larger integrated device manufacturers such
as IBM and Motorola, according to Thales Lee, a manager at Vision
Communications Inc., a Taipei-based consulting firm. "ASE is looking
for more cooperation with the IDMs," Lee said.
ASE is no longer a low-technology packager, offering instead a
multitude of commodity-level and complex packages: BGA, CSP, PDIP,
PLCC, QFP, and others. About 40% of ASE's capacity is used for QFP
production, and another 40% for BGAs.
Recently, ASE licensed microBGA technology from Tessera Inc., and is
also preparing to offer advanced flip-chip technology, which attaches
the chip directly to the substrate through solder bumps rather than
using traditional wiring-bonding techniques.
"Flip-chip is designed for chips in the 500-MHz range or higher;
traditional wire-bonding methods can't support these currents," said
J.J. Lee, assistant chief engineer at ASE.
The company expects its flip-chip technology to be ready for volume
shipments in early 2001. The technology will account for approximately
2% to 5% of overall capacity next year, according to Lee.
Can it make the leap?
Despite ASE's rapid growth, one major question remains: Can ASE move
past Amkor into the No. 1 position?
It's going to be quite difficult, according to Paul Hoffman, senior
vice president of Amkor's module unit. "We're still much larger [than
ASE], and we still have the lead in technology," he said.
In addition, ASE faces a major threat in its own backyard from the
likes of Amkor and ASE's current partner, TSMC. Recently, Taiwan
Semiconductor & Test Co., a new IC assembly joint venture between Acer
Inc., Amkor, and TSMC, began operations in Hsinchu.
Further, ASE must provide more highly complex products and more
value-added services to fend off not only competitors in Taiwan, but
the new big kid on the block-China.
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By: Macabe Keliher
Copyright 2000 CMP Media Inc.
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