12<strong>Chip</strong> <strong>Scale</strong> <strong>Review</strong>. <strong>March</strong>/<strong>April</strong> <strong>2010</strong> . [<strong>Chip</strong><strong>Scale</strong><strong>Review</strong>.com]
IC Assembly and Test Market Poisedfor Growth in <strong>2010</strong>The market and the Top 10 (11) players are analyzedBy Ron Molnar [AZ Tech Direct, LLC]After dismal 2008 and 2009performances, the semiconductormarket and its subset, ICassembly and test, are poised for substantialgrowth in <strong>2010</strong>. Bill McClean, President ofIC Insights, a leading market research firm,reported at the recent Global BusinessCouncil meeting in Scottsdale, AZ, that theworldwide IC market is expected to grow27% in <strong>2010</strong> to $303 billion. The worldwide<strong>2010</strong> semiconductor market revenues areexpected to eclipse the previous highachieved in 2007.Semiconductor packaging has become amajor differentiator of semiconductorproducts and a major factor in productperformance. For some high performanceapplications, packaging, assembly, and test(PAT) now represents a significant portionof the IC product cost. For many hand-heldconsumer applications, advanced packagingin the form of chip-scale, leadless DFN orQFN plastic packages, and wafer-levelpackaging (WLP) enable the miniaturizationdemanded by consumers. To minimize capitalexpenditures and unit costs, and to achievevital time-to-market product introductions,integrated device manufacturers (IDMs) areoutsourcing more and more of their PATmanufacturing processes to semiconductorassembly and test services (SATS)companies around the world.Fabless semiconductor companies haveembraced the outsourcing model since themid-1980s and now form a solid base ofcustomers for the SATS industry. Over thelast decade, they have grown their revenues5-10x faster than IDMs and have capturednearly 25% of the global semiconductormarket. Based on their 2009 revenues, thelargest fabless IC companies are Qualcomm,AMD, Broadcom, MediaTek, Nvidia,Marvell, Xilinx, LSI Logic, and Altera. Eachof them contract with one or more SATScompanies for their IC packaging, assembly,and test needs.2009Rank123456789102008Rank Company HeadquartersCountry12345671189ASEAmkor TechnologySPILSTATS <strong>Chip</strong>PACPowertech TechnologyUTAC<strong>Chip</strong>MOS TechnologiesJCETKing Yuan ElectronicsUnisemTotal Top 10OthersTotal MarketTaiwanUnited StatesTaiwanSingaporeTaiwanSingaporeTaiwanChinaTaiwanMalaysia2008Revenue($M)2,9522,6581,9181,65899471151934941337312,5457,55620.1012009Revenue($M)2,5972,1791,7221,32698260036834231930010,7356,45217,187Table 1. Top 10 SATS Companies’ Revenues, 2009. (Source: Gartner, February <strong>2010</strong>)SATS MarketIn <strong>April</strong> 2008 <strong>Chip</strong> <strong>Scale</strong> <strong>Review</strong>reported, “The outsourced assemblyand test industry boasted two of itsbest years in 2006 and 2007, with severalkey players setting new records forincome and revenue.” However, thisdidn’t last long, and the SATS industrysuffered negative growth in both 2008and 2009. Devastating quarterlydeclines were reported from the end of2008 through early 2009. The U.S. stockmarket rebounded relatively sharplyfrom its <strong>March</strong> 2009 lows due in largepart to the unprecedented governmentactions and subsidies. Early forecastspredicted the SATS market woulddecline by as much as 30% in 2009, butit rebounded with the upturn in theeconomy.The total SATS industry revenue of$17.2 billion in 2009 actually declined only14.5% from the $20.1 billion in 2008 -considerably less than predicted. TheSATS industry continues to rebound. JimWalker, Research VP, SemiconductorManufacturing, of Gartner/Dataqueststates, “For <strong>2010</strong>, the SATS industry will2009Growth(%)-12.0-18.0-10.2-20.0-1.2-15.6-29.1-2.0-22.8-19.6-14.4-14.6-14.5experience growth of over 26% to $21.6billion, with a 5-year CAGR of 12.2%.”He goes on to say, “Going forward, theSATS market should account for morethan 50% of the IC assembly and testmarket by 2012.” That’s a major milestonefor the SATS industry.SATS RankingThe top ten SATS companiesaccounted for approximately 62.5% of thetotal global SATS market revenue in 2009.The largest seven SATS companies of theTop 10 in the world retained theirpositions from 2008 to 2009 as reportedby Gartner/Dataquest in their recent<strong>March</strong> 1, <strong>2010</strong>, Market Share Alert:Preliminary SATS Market Share,Worldwide, 2009 report (Table 1).Rounding out the last 3 positionsof the Top 10 for 2009 are JiangsuChangjiang Electronics Technology(JCET), King Yuan Electronics(KYEC), and Unisem. At No. 8, JCETis the first China-based company toachieve a Top 10 ranking. Carsemdropped from the Top 10 list in 2009one spot to No. 11.<strong>Chip</strong> <strong>Scale</strong> <strong>Review</strong>. <strong>March</strong>/<strong>April</strong> <strong>2010</strong> . [<strong>Chip</strong><strong>Scale</strong><strong>Review</strong>.com] 13