BY JEFFREY C. DEMMIN
While the numbers were generally positive for the assembly and test subcontractors in the first quarter of 2004, the industry cooled off somewhat to start the year. The percentage revenue growth was in the single digits or slightly negative compared to numbers well into the double digits the previous quarter.
Amkor, ASE and STATS cited wafer shortages as a factor in financial results that were less impressive than in recent quarters. With foundry capacity fully occupied, some of the projected business at the packaging houses was delayed. Still, nearly every company had good news to report.
ASE maintained its top spot among assembly and test subcontractors, in spite of a 5.4% drop in revenue. The company also reported a healthy profit of $48.9 million, with a gross margin of 22%. Significant news for ASE was the acquisition of the NEC assembly and test facility at Yamagata, giving ASE a much bigger presence in Japan. A look at the details of ASE's report revealed an interesting trend. The revenue from wafer sort represented 20% of ASE's test revenue, compared to just 11% in the same quarter a year ago — an increase from about $8 million to $20 million in wafer sort business.
Amkor crept up on ASE slightly, with a modest 1.2% growth in revenue. Amkor also reported a profit of $12.2 million and had an optimistic view for the rest of 2004. The projected revenue for Q2 is 5 to 8% higher than in Q1, and revenue of over $2 billion is predicted for the year. One notable item in Amkor's report was a growth in legacy products, indicating the IC makers are not investing in additional assembly capability of their own. Amkor also recently announced a long-term strategic deal with IBM. The impact on the size of Amkor's business should be measurable in the upcoming quarters, but the increased test capability should help diversify Amkor's business. It currently gets only 9% of its revenue from test.
SPIL saw a healthy growth of 5.4% this quarter, with a large profit of $42.5 million. Like Amkor, SPIL has a relatively small test business (9% by revenue), but it is looking to make an increase there with 24% of its capital expenditure being for test equipment. SPIL's customer base shifted somewhat during the quarter, with computers shrinking from 50 to 43% of its business. The shortfall was taken up by a growth in communication products.
STATS continued impressive growth for yet another quarter. Its growth of 10.6% led the top suppliers and contributed to a growth of over 75% from one year ago. STATS actually moved ahead of ChipPAC and OSE in Q1 2004, making it the fourth largest subcontractor. Two years ago STATS was less than half the size of ChipPAC, so the growth at STATS has been truly phenomenal. (ChipPAC grew by 60% during that span.) STATS's business is nearly evenly split between test and assembly, which sets it apart from most other subcontractors, so perhaps that diversification has been a factor in its growth.
ASAT had the best growth during the last year, with revenue increasing by 82.6%. It began production at its facility in China during Q1, so bringing that capability on line might contribute to continued healthy growth.
ChipMOS had a great quarter, with 21% growth in revenue. About half of this was due to a change in accounting that included in the results more of the companies in which ChipMOS has an equity stake. The gross margin at ChipMOS was 36%, and the company cited strength in its memory testing segment.
The STATS/ChipPAC merger is nearly complete, so next quarter's update might reflect actual numbers for the new company. Once STATS ChipPAC is established, there will be a clearer boundary between the top four subcontractors and the rest of the pack, so we will be looking for any trends that differentiate the two groups.
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JEFFREY C. DEMMIN, director of product marketing, may be contacted at Tessera Technologies Inc., 3099 Orchard Dr., San Jose, CA 95134; (408) 383-3691; e-mail: [email protected]m.