Category Archives: Packaging

By Ardy Johnson, Vice President of Marketing and Product Management, Rudolph Technologies, Inc.

Advanced packaging is in the early stages of a dynamic growth phase. Demand for equipment and related tools in the 3DIC and wafer-level packaging area is forecasted to grow from approximately $370 million in 2010 to over $2.5 billion by 2016. Advanced packaging requirements are driving the evolution of back end manufacturing to become more similar to the front end where the need to tie the entire process together with effective process control has long been established. Rudolph, with a long history in both the front end and back end, is participating fully in this evolution with a “total solution” approach, as exemplified by our recent entry into the back end photolithography market.

Ideally, a photolithography solution for advanced packaging begins with a reduction stepper that is uniquely capable of meeting current and future requirements of advanced packaging processes: greater depth of focus to handle the thicker resists required by exaggerated wafer topography; flexible automation and specialized handling for warped wafers, reconstituted wafers, and large panels; on-the-fly focusing at every exposure to ensure maximum image quality; and an on-board reticle library and fast-change reticle wheel for increased productivity. But the full power of the total solution derives from integrating the stepper with a suite of inspection and metrology tools and process control software: an inspection tool for CD overlay measurements; APC software for closed loop, run to run control; and a yield management system to provide fab-wide, automated, real-time process control feedback.

Fleet management provides another example of the use of automated data collection and analysis to increase equipment uptime, improve yield, and reduce production costs. It monitors the output and operational parameters of inspection and metrology tools performing similar tasks to detect statistical excursions that indicate tool health and stability. One important benefit of fleet management is the ability to improve tool matching-based actual performance.

As backend processes continue to evolve, incorporating the next generation packaging technologies needed to reduce size and increase functionality is a necessity, and manufacturers will derive increasing value from an integrated, total solution approach.

By Paul Lindner, Executive Technology Director, EV Group

A city’s skyline is a testament to the transformative power of technology—skyscrapers made possible only by the Bessemer steel manufacturing process introduced in the 19th century.  Now in the 21st century, the world is undergoing another major transformation, as new MEMS and 3D semiconductor manufacturing processes create the building blocks for the Internet of Things. Being able to build higher gave birth to the modern city, while being able to connect not just people, but all manner of devices, promises to be just as big a reorganization of society. Similar to skyscrapers and the Bessemer process, the infrastructure of the Internet of Things is being enabled by new low-cost, high- volume manufacturing processes.

Today, sensors are not a new technology anymore than steel was in the 19th century. What’s new is the introduction of manufacturing technologies that are lowering costs to the point where sensors transmitting information to the Internet can be affordably integrated into almost any device. Material advances have played an important role, as metal bonding technologies enable narrower seal frames and shrinks of MEMS devices. In 2013, device shrinks, new high-throughput tools and increased competition between manufacturers, as volume picks up in increasingly standardized capacity lines, will further drive the commoditization of MEMS. With Windows 8 for example providing an API for sensors, operating system requirements are also driving sensor standardization, thereby making it easier to assemble the infrastructure for the Internet of Things.

The Internet of Things, however, is about more than just gathering information through ubiquitous sensors. Huge amounts of data need to be affordably stored and analyzed, in order to be useful, which requires keeping Moore’s Law alive. Fortunately, new semiconductor 3D manufacturing technologies are poised to play a critical role in further commoditizing memory and processing power. In 2013 high volume production of true 3D technology will commence. The industry will also see intensified wafer level developments particularly around image sensors and memory, as new DRAM designs allow for monolithic integration at the wafer level. Wafer-to-wafer bonding processes, combined with built in self-test, error detection and correction  are poised to overcome one of the few remaining hurdles to high-volume, low-cost 3D manufacturing.

Although pundits can debate how the Internet of Things will transform the world, it is becoming increasingly clear that new MEMS and 3D high-volume, low-cost manufacturing technologies will accelerate a radical change to society’s cyber skyline.

By Ron Leckie, President, Infrastructure Advisors

2012 brought a slowdown in consumer spending which has negatively impacted chip unit demand.  In fact, chip units have been essentially flat for much of the last two years.  However, the good news is that unlike in prior slow periods, average selling prices have maintained a steady level.  As a result, the industry sits today with slightly elevated inventories and also with factory utilization levels that are generally about 15 percentage points below normal healthy levels.  I look to enter 2013 with continued seasonal slowness, but anticipate that unit volumes and utilization levels will start picking up by the second quarter and throughout the year.

As a result, with utilization rates at the low end of the range, we will not be seeing any significant capacity additions until later in the year.  Capital purchases will be primarily for new technology capabilities until unit volumes pick up and in turn drive capacity needs.  The Test and Assembly equipment sectors should feel a recovery slightly ahead of their Wafer Fab counterparts since they tend to be more units-driven.

The semiconductor industry and its entire supply chain are certainly maturing and are becoming more dependent than ever on the overall economy.  Consumer influence is a big factor affecting semiconductor and electronics growth.  Individual companies either need to have new innovative products to gain market share and drive organic growth, or they need to acquire companies that will take them into new adjacent markets.

In recent years, we have seen consolidation by some of the larger companies in the industry.  However, when walking around trade shows such as Semicon West, it is evident just how many small and medium sized companies still exist.  For these companies to thrive in a mature market, they need critical mass and now is the time to be looking at strategic alternatives.  Such smaller companies with complementary product lines and customers should be looking for merger opportunities.  The semiconductor industry is truly global and for example, there are big synergies to be found when bringing together global sales and service operations.  Customers prefer working with strong suppliers who will be around to support them for years to come.

For the equipment and materials suppliers, their customer base is consolidating. Some of this is through M&A (Merger and Acquisition) activities and some is through the transition to heavily outsourced business models.  Instead of selling to many IDMs, they now find themselves dealing with customers who are mostly a few large IDMs, large Wafer Foundries and OSATs.

Increasingly, we find ourselves becoming more involved with clients who are seeking strategic alternatives to “business as normal.”  In 2013, it is anticipated that M&A transaction activities will increase and result in further consolidation of the semiconductor supply chain.  It’s true what they say – size does matter.

By Bill McClean, president, IC Insights

The expectations for global economic growth consistently deteriorated throughout 2012, with worldwide GDP eventually growing by only 2.6% last year.  It should be noted that 2.5% or less worldwide GDP growth is typically considered a global recession.  IC Insights’ forecast for 2013 worldwide GDP growth is 3.2%.  Although this figure is higher than the 2.6% increase logged in 2012, it would still be 0.3 points below the 3.5% long-term average annual global GDP growth rate.

One of the primary reasons for weak 2012 worldwide GDP growth was the negative growth registered by the Eurozone and U.K. economies.  Unfortunately, the Eurozone is not expected to display a strong rebound in 2013, with 0.0% growth forecast for the Eurozone economy this year.

China’s GDP growth rate dropped to only 7.7% in 2012 with a modest rebound to 8.1% growth forecast for 2013.  While many developed countries would welcome 7% or higher GDP growth rates, for China, this figure is significantly below the 10% and greater annual GDP increases logged from 2002-2009.  In an attempt to address its economic “slowdown,” the Chinese government was quick to inject stimulus into its economy starting in the second half of 2012 by aggressively lowering interest rates as well as enacting $156 billion in construction project programs.  While this stimulus was too late to have a significant positive affect on its 2012 GDP growth, China’s GDP is likely to get at least a modest boost from this activity in 2013.

While the correlation between worldwide GDP growth and IC industry growth has historically been good, IC Insights believes that the correlation in 2013 will be very good, as it was in 2012.   Using a worldwide GDP forecast of 3.2%, the most likely range for worldwide IC market growth in 2013 is 3-7%.

The election-year cycle is one reason why IC Insights has identified 2013 as a possible slow growth year in the worldwide economy and IC industry.  Over the past 10 post-U.S.-election years, worldwide GDP growth averaged 3.1% with worldwide IC industry growth averaging only 4%.  Moreover, worldwide IC industry growth exceeded 8% in only three of these 10 post-U.S.-election years (1973, 1977, and 1993), and only once since the late 1970s.

IC Insights believes that the IC industry cycles are becoming increasingly tied to the health of the worldwide economy.  While poor IC market growth has occurred during periods of strong worldwide economic growth, primarily due to IC industry overcapacity and the resulting IC price declines, it is rare to have strong IC market growth without at least a “good” worldwide economy to support it.  Thus, over the next five years, annual global IC market growth rates are expected to closely mirror the performance of worldwide GDP growth. 

Overall, the IC industry is set to emerge from a difficult 5-year period of minimal growth.  From 2007-2012, the IC market grew at an average annual rate of 2.1%.  In IC Insights’ opinion, the “bottom” of the current cycle in the worldwide economy and IC industry was reached in 2012 and 2013 will mark the beginning of the next cyclical upturn—one in which the IC market CAGR will more than triple to 7.4% in the 2012-2017 timeperiod. 

By Christian Gregor Dieseldorff, director, SEMI Industry Research & Statistics, San Jose, CA USA  

Despite difficult times, growing demand for mobile devices (such as tablets and phones) inspires an improved outlook for chip sales in 2013.  Various forecasts range from 4% to 16% revenue growth for 2013 (average of forecasts 7%). As observed in the past, chip sales and capex typically ride the same roller coaster; however, 2013 appears to be another year of uncertainty. While chip sales may rise in 2013, expectations for equipment range from timid 5% growth down to double-digit decreases — definitely not the same roller coaster.

The largest spenders on fab equipment are Samsung, TSMC and Intel.  As of mid-December 2012, some of these companies still have not made any official announcement about 2013 capex plans.

The SEMI Consensus Forecast and the SEMI World Fab Forecast, with data collected from two different methodologies, point to the same conclusion.  The year-end Consensus Forecast for wafer processing predicts 0% growth (flat) for 2013.  Meanwhile, the World Fab Forecast report for Front End Fabs (published November 2012) also shows 0% growth (flat) for 2013 and total fab equipment spending hovering at US$ 32.4 billion (including Discretes and LEDs, used equipment and in-house equipment).  The projected number of facilities equipping will drop, from 212 in 2012 to 182 in 2013. Fab equipment spending saw a drastic dip in 2H12 and, accounting for seasonal weakness and near-term uncertainty, will be even lower in 1Q13.  Examining equipment spending by product type, System LSI is expected to lag in 2013. Spending for Flash declined rapidly in 2H12 (by over 40%) but is expected to pick up by 2H13. The foundry sector is also expected to increase in 2013, led by major player TSMC, as well as Samsung, Globalfoundries and UMC.

While fab construction spending slowed in 2012, at -15%, SEMI data projects an increase of 3.7% in 2013 (from $5.6 billion in 2012 to $5.8 billion in 2013).  The World Fab Forecast tracks 34 fab construction projects for 2013 (down from 51 in 2012).  An additional 10 new construction projects (with various probabilities) may start in 2013. The largest increase for construction spending in 2013 is expected to be for dedicated foundries and Flash-related facilities.

In 2012, many device manufacturers stopped adding new capacity due to declining average selling prices and high inventories. This is most pronounced in the Flash sector, as seen with Sandisk since the beginning of 2012, and both Samsung and Toshiba starting 3Q12.

Breaking down the industry by product type, capacity growth for System LSI is expected to decrease in 2013. Flash capacity additions dragged in 2H12. But more activity is expected for Flash by mid-2013, with nearly 6% growth. The data also point to a rapid increase of installed capacity for new technology nodes, not only for 28nm but also from 24nm to 18nm and first ramps for 17nm to 13nm in 2013.

If the global economy and GDP begin to improve, and chip sales actually do increase in the higher single-digit range, equipment spending is expected to ride the same roller coaster, going even higher for 2013.

December 29, 2012 – Industry watchers have been lowering their outlooks for 2013 over the past few weeks, but there’s one set of opinions that still see optimism for an industry rebound in 2013 — chip industry executives themselves.

In its annual study, KPMG found three quarters of semiconductor executives polled believe they will see revenue growth in the next fiscal year — that’s up from 63% in last year’s survey. Two-thirds expect to hire more workers (vs. 48% in 2011), and 71% say annual industry profitability will increase in 2013. Overall their sentiment is for a recovery that builds up steam especially heading into the second half of the year.

KPMG’s Global Semiconductor Survey, conducted in September, surveyed 152 semiconductor industry business leaders (primarily senior-level execs) at device, foundry, and fabless manufacturers, half of whom have annual revenue of $1 billion or more. Overall, its "Semiconductor Business Confidence Index" climbs to 57, stepping across the 50/50 threshold into optimism vs. the index of 46 recorded a year ago. Among its other findings:

— More activity, inside and out. Seventy-three percent of respondents expect to increase capital spending over the next fiscal year, up from 51% a year ago — and 24% expect to increase spending by 10% or more, vs. 10% of respondents in late 2011. Just 6% of respondents expect capital spending cuts, s. 18% a year ago. Similarly, 77% of execs expect semiconductor-related R&D spending to increase in 2013, up from just 65% a year ago. And two thirds of execs expect more merger and acquisition deals in fiscal 2013, up from 62% a year ago looking into 2012’s crystal ball.

— The US is tops again. Execs placed the US ahead of China in the most important geographic markets for semiconductor revenue growth three years out — for a third consecutive year, fewer see China as their most important market. Next in priority are Europe, Korea, and then Taiwan — which two years ago was ranked 2nd and slightly ahead of the US, but might be losing favor due to exposure to softer Japanese and Chinese economies, according to Gary Matuszak, global chair of KPMG’s Technology, Media and Telecommunications practice. Also, "significantly" fewer chip execs viewed China as a top-three hiring market in 2013; it’s still in first place, but the US and Europe are gaining favor.

— Consumer is king, redux. Consumer applications are officially the most important revenue driver, as viewed by the chip execs over the next fiscal year; computing now ranks third, behind wireless. "Unlike past recoveries, this one won’t be driven by wireless handsets and wireless communications alone," said Matuszak. Other revenue-driving apps — industrial, medical, automotive (with many sub-applications in body electronics, communications convergence, and safety), and power management (a big feature in wireless devices) — were emphasized by more chip execs in this year’s survey than in the past three years. That’s a clear indication how semiconductors have proliferated beyond traditional wireless and computing applications, such as mobile commerce and various automotive functionalities, added Ron Steger, global chair of KPMG’s Semiconductor practice. Also getting a big push from semi execs: "renewal energy" such as battery technologies, listed by 53% of execs as an important revenue driver over the next three years, up from just 36% a year ago.

Percentage of survey respondents who expect their company’s semiconductor-
related capital spending to increase over the next fiscal year. (Source: KPMG)

December 28, 2012 – The FlexTech Alliance has awarded 4D Technology (Tucson, AZ) a contract to develop an optical system that addresses a shortcoming in roll-to-roll (R2R) electronics manufacturing: in situ, high-resolution mapping of surface topography and defects on a moving, flexible web. The $956K development project, expected to be completed in early 2014, will enable new, real-time levels of process control and yield enhancement, according to the groups.

Surface metrology and defect detection of web materials in R2R are well-known needs for flexible electronics manufacturing. This project’s primary focus is on analyzing and measuring transparent substrates, but the partners claim it will be applicable to translucent and reflective materials. Suppliers and customers of web materials will be able to agree upon and implement practical specifications and quality metrics to ensure consistent materials (incoming and outgoing) at the lowest possible cost.

Surface roughness, defect density, and cleanliness, key parameters for R2R substrates, are difficult to measure with high-resolution on moving substrates, noted Malcolm J. Thompson, chief technical advisor to the FlexTech Alliance. “This project with 4D Technology was initiated in order to upgrade the equipment industry’s capability to provide a metrology tool that can be integrated into a manufacturing line.”

“The new metrology system, as an on-line instrument, will register, identify and classify defects for pre-processing and post-processing of transparent flexible web materials. This will help overcome current manufacturing obstacles by replacing qualitative specs and visual inspection methods with quantitative specs supported by data acquisition and analysis,” added James Millerd, PhD, president of 4D Technology.

December 20, 2012 – Global spending on wafer fab equipment (WFE) is now on pace to finish 2012 with a -17% annual decline, and 2013 now looks like it’ll only be slightly better at a -10% dropoff, before the next cyclical spending upturn begins in 2014, according to an updated forecast from Gartner.

The firm now sees 2012 WFE investments coming in at about $29.9B, a -17.4% decline from 2011. That compares with an earlier projection of a -13% decline made in October, which was itself a downward revision (-9% in June, -11% in March). Those numbers are slightly steeper, but the trend is similar, to SEMI’s recent projections which also predict a rebound coming in 2014.

The environment has softened significantly in just the past few weeks, Gartner says, as the macroeconomic suffering takes a toll on consumer spending, which trickles down to overall capital spending (equipment plus facilities services, etc.) — which Gartner now sees declining -10.7% in 2012 vs. its -9.3% forecast in the third quarter. That will be followed by another -14.7% decline in 2013, as semiconductor manufacturers deal with excess capacity and a slow macroeconomy.

"Although a period of inventory correction that led to lowered production levels in the first half of 2012 appears to be over, inventories remain at critical levels," Johnson warned. "High inventories, combined with overall market weakness, will continue to depress utilization rates into the first half of 2013."

The year started off strong for wafer fab equipment spending as chipmakers ramped sub-30nm production and needed new tools to prop up yields, but as yields improve that equipment demand is softening, explains Bob Johnson, research VP at Gartner. Overall yields will touch bottom below 80% by the end of 2012 and slowly creep up to around 85% by the end of 2013, Gartner says; leading-edge utilization will be a bit higher as always, moving from mid-80% up to the low-90% range over the same period.

There’s hope on the horizon, though. Memory and logic spending should realign in 2014 with "substantial increases" in investments, followed by a flat to slightly positive 2015. look for a new WFE growth cycle starting in 2014, and lasting through 2016.

Here’s how Gartner sees things shaping out near-term, by technology investment:

— Memory: Continuing to be weak through 2013, with maintenance-level investments for DRAM and a slightly down NAND market until supply and demand are in balance.

— Foundry: Spending will increase 7.4% in 2013, as both IDMs and semiconductor assembly/test services (SATS) companies absorb spending declines.

— Logic: The only positive driver for capital investments in 2012 increasing just 3%, Gartner notes, thanks to the aforementioned sub-30nm ramp. Smartphones and media tablets won’t be enough to bring up utilization levels to where chipmakers need them, though, Johnson notes.

Projected global spending on semiconductor manufacturing equipment, in US $M. (Source: Gartner)

Semiconductor Manufacturing International Corp., or SMIC, (NYSE: SMI; SEHK: 981), is claiming a breakthrough in its development of backside-illuminated (BSI) CMOS image sensor (CIS) technology, with the first test chip demonstrating good image quality even in low-light conditions. The complete BSI process technology, which has been independently developed by SMIC, will serve the market for high-end mobile phone cameras, and is targeted to enter risk production with partnering customers in 2013.

The BSI process development allows SMIC to broaden its CIS foundry service offerings to customers with five-megapixel and higher resolution phone cameras and high-performance video camera products. BSI sensors are more light-sensitive than frontside-illuminated CMOS sensors, allowing today’s top smartphones to take brighter, clearer pictures at night or indoors. While driving its BSI technology toward commercial production, the company is soon to begin early development of next-generation CIS technology based on 3D integrated circuits.

"We are proud to be the first Chinese foundry to successfully develop BSI CMOS image sensors," said SMIC CEO Dr. TY Chiu. "CMOS image sensors are among the key value-added technologies that SMIC offers for customers in the mobile device and imaging markets."

"With this achievement as a stepping stone, our development team will drive the BSI sensor technology to timely commercialization," added Dr. Shiuh-Wuu Lee, SMIC’s Senior Vice President of Technology Development.

Since the introduction of its frontside-illuminated CIS process in 2005, SMIC says it has become a major foundry for CIS wafers, primarily for mobile phone and consumer electronics applications. In order to provide turnkey CIS fabrication service, SMIC and Toppan Printing of Japan operate a joint venture, Toppan SMIC Electronics (Shanghai) Co., Ltd., (TSES), which fabricates on-chip color filters and micro lenses at SMIC’s Shanghai site.

Earlier this year, rival foundry United Microelectronics Corp. (UMC) and STMicroelectronics said they are collaborating on 65nm CMOS image sensor (CIS) technology using backside illumination (BSI), following completion of a frontside illumination (FSI) process at UMC’s 300mm Fab 12i in Singapore.

December 17, 2012 – Samsung Austin Semiconductor sent out a PR last week about previously announced $4B investments in its Austin, TX facilities. The site is on schedule for production in 2H13 for mobile application processors (28nm process technologies on 300mm wafers). Samsung Austin Research Center also is adding about 200 engineers to fuel this effort, according to the company. The commitment — representing the largest single foreign investment ever made in the state of Texas — will bring Samsung’s total investment in its Austin Semiconductor unit to more than $15B since 1996.

The original Samsung Austin investment announcement — much less this update, thin on new details — wasn’t exactly a surprise; a 3Q12 retrofit had been seen as one of the key capex drivers for the latter half of this year. Samsung is expected to push its capex by 11% in 2012 to $13.1B, just ahead of Intel’s $12.5B (16% Y/Y growth) — together representing fully 40% of worldwide capital spending this year.

In a quick research note, Barclays’ CJ Muse notes that Samsung’s overall capex could be as much as halved this year (a -30% to -50% range), with most of it coming from the logic side due to an Apple defection. He currently models Samsung LSI’s capex in 2013 declining about 25% to KRW 6 trillion (~$5.4B), and possibly even more, and that it will focus on a 32nm-to-28nm transition, i.e. "spending will be shrink-oriented vs. capacity-oriented." Near-term, Muse sees Samsung’s orders, currently at "negligible levels," as possibly picking up in 1H13 to support this Austin push. He thinks this will contribute to an overall sector-wide orders environment of "flattish to slightly up (in-line with expectations)."

Another thing this announcement accomplishes, Muse notes, is a signal to the marketplace that Samsung is still investing to remain competitive with TSMC. Apple has openly partnered with Samsung in Austin to make the "engine" of the iPhone and iPad, despite the two companies’ fierce and broad competition in finished electronics devices. That business is in doubt, though, as many speculate about the electronics giant will seek other noncompetitive partners for future chip orders. With this $4B pledge, even if Samsung loses Apple’s business, it is sending a message to other fabless firms who may decide to grab some of that vacated capacity in 2013-2104.