What’s driving outsourced assembly and test in Japan
11/01/2005
Successful suppliers to the semiconductor industry must acknowledge the importance of Japan in semiconductor manufacturing. Japan is the world’s second-largest geographical market in terms of chip sales, and the island nation remains the semiconductor industry’s bellwether when it comes to how consumer electronics drive market trends.
 Figure 1. Only the rest of Asia Pacific will exceed Japan in semiconductor sales. (Source: WSTS forecast) |
The latest forecast from World Semiconductor Trade Statistics (WSTS) shows Japan firmly positioned as No. 2 in chip revenue, trailing the greater Asia Pacific region (i.e., Korea, Taiwan, China, etc.) and leading the Americas and Europe. Japan’s semiconductor market accounts for a little more than 20% of global chip revenue, based on WSTS estimates, and its growth is forecasted to exceed that of Europe and the Americas over the next few years (Fig. 1). Furthermore, three of Japan’s semiconductor manufacturers are consistently in the top 10 semiconductor sales rankings for the industry: Renesas, Toshiba, and NEC (ranked fourth, fifth, and tenth, respectively, based on July 2005 data from IC Insights Inc.).
Consumer electronics bellwether
A key reason behind Amkor’s efforts in building outsourced semiconductor assembly and test (OSAT) capability in Japan is that the country has a looming presence at the leading edge of consumer electronics. In addition, the potential for growth in OSAT services has been significant in Japan, where until recently, integrated device manufacturers (IDM) used relatively little outsourcing for assembly and test requirements.
In Japan, the need for advanced IC packaging technology often is driven by the country’s lead in launching new consumer products. For example, Japan was the first to introduce camera phones and third-generation (3G) cellular phone handsets. Japan leads the world in advanced gaming modules. And Japan’s Sony Corp. is the driving force behind television-centric networking, which - unlike the PC-centric model mostly supported in the US - is being proposed as the emerging center of consumer and home electronics.
Nearly all facets of Japan’s consumer electronics industry drive supporting semiconductor technology uniquely, and in turn - from the perspective of an OSAT supplier in Japan - this pushes assembly and packaging to new heights. The importance of consumer electronics can be seen everywhere in Japan. The nation supports 135 million people in roughly the same area as California, so a premium is put on space, which tends to drive product miniaturization. Most citizens commute by train, and the cell phone increasingly provides the connection to basic needs during otherwise unproductive travel time.
Consequently, Japanese consumers want cell phones with data streaming capability for a growing list of applications. Along with communications, they want access to services and features supporting entertainment, such as games and music. Japan also is moving rapidly toward integrating television on cell-phone handsets. A step in this direction was disclosed in May 2004 by Sony, which announced details of its LocationFree TV - a portable, broadband, LCD-based television system that can be used anywhere.
As a result of this technology compression and convergence, Japan’s consumer electronics products tend to be two years ahead of those in the rest of the world. Therefore, a presence in Japan is essential for companies and suppliers of services in leading-edge IC manufacturing.
Aggressive packaging development
For example, the link between Japan’s consumer products and the leading edge in packaging technology is illustrated in a recent development project that targeted an OEM’s design for a second-generation gaming platform. The objective was to produce a lower-cost, smaller gaming box. An earlier version of the platform included a graphics processor, mounted cavity-down in an enhanced ball-grid array (EBGA) and the central processor unit (CPU) in a plastic BGA (PBGA). The new box combined the graphics and CPU functions into one IC, using 90nm processes and low-k/copper interconnect technology fabricated on 300mm wafers. Other than the basic footprint requirement and the fact that this IC produced 8W of power, the OEM was willing to consider various options for chip packaging. The OEM had been considering a 42.5×42.5mm EBGA solution that was similar in cost to the package used in the earlier-generation box.
Working with this OEM, Amkor came up with a list of solutions that included thermally enhanced PBGAs (TEPBGA), which are advanced packages featuring beefed-up laminate substrates (e.g., thicker copper planes, more thermal vias, etc.), die-up wire bonding, and over-molding using standard compounds - all for a much lower cost than an equivalent EBGA solution (Fig. 2). The second generation of this package (TEPBGA-2) includes an embedded heat spreader that is left exposed after molding. The TEPBGA-2 has become an attractive solution for many power-hungry graphics chips. However, while analysis revealed that a 35×35mm TEPBGA-2 was the right size for the new device, the package could not adequately handle the combined requirement of dissipating 8W of power and providing a low-stress environment for a graphics/CPU die made with low-k dielectrics.
 Figure 2. Cross-section of a thermally enhanced PBGA (TEPBGA) and the real thing (inset). |
Enhanced TEPBGA designs were then modeled for greater thermal performance and less stress around the die region. Modeled variables included thermally enhanced mold compounds, thicker-plated thermal vias, filling vias with conductive epoxy, thermally enhanced die-attach compounds, thinner mold caps, and various combinations with and without heat spreaders. The modeled variables also included completely or partially removing the solder mask under the die area to provide direct contact to metal in the TEPBGA package. For each combination in this test matrix, comparisons were made between thermal performance, reliability risk, package costs, and manufacturability. A few favorable combinations were built for testing, which led to a final solution: the TEPBGA-3 package.
The optimized TEPBGA-3 solution was then compared with the proposed EBGA package. Packaging the combined graphics/CPU chip in the EBGA solution showed a thermal performance (i.e., TJA or thermal resistance from the die junction to ambient) of 12°C/W at a cost that was 2.75× of a PBGA. (The PBGA package had an unsatisfactory performance of TJA of 18°C/W). The new TEPBGA-3 solution showed a cost of only 1.25× a PBGA while providing a suitable thermal performance of 13.5°C/W. The conclusion was that for a 25% cost increase over a standard PBGA, the TEPBGA-3 solution would give the OEM nearly the same thermal performance of an EBGA for approximately 40% of the price.
The combination of thermal performance and relative cost savings - compared to the EBGA - more than justified the OEM’s expense of $750,000 to change its production mask set for the die-up TEPBGA-3 packaging solution. If marketing projections for the second-generation gaming platform play out, the OEM is expected to save several million dollars/month as a result of its co-design work with Amkor early in the system’s development cycle.
Emergence of the OSAT model
Japan’s semiconductor sector has slowly evolved from almost total reliance on in-house assembly and packaging operations to increased outsourcing of assembly and test, much like what has occurred in the global chip industry as a whole. Until early 2001, Japan’s IDMs used relatively little outsourcing for the country’s $6-$8 billion annual assembly and testing requirements. Instead, the chip companies relied primarily on their own internal, domestic operations, but the shift toward OSAT services in Japan quickly gained traction as the country’s IDMs began implementing “asset-light” strategies to become more financially agile and to attract new investments.
In January 2001, Amkor made its strategic entry into the Japanese market by striking a joint venture with Toshiba Corp., which aimed to reduce its capital requirements associated with diversifying packaging needs and expenditures in maintaining advanced packaging technology. Toshiba sought to accelerate its strategy of focusing more resources on design, process, and wafer fabrication.
The joint venture enabled Amkor to establish an assembly and test operation at Iwate Toshiba Electronics in Kitakami. The initial customer of the joint venture was the Iwate Toshiba wafer fab, but Amkor also started marketing OSAT services to other semiconductor manufacturers that needed local assembly and test capability. The venture became the first major OSAT operation in Japan and established a partnership for development of leading-edge packages for Toshiba semiconductor products.
In 2002, Amkor expanded its position in Japan by acquiring the semiconductor assembly business of Citizen Watch Co. Ltd, which, coincidentally, also was located in the Iwate prefecture. Citizen’s objective was also to transfer its noncore assembly and chip testing business to a major OSAT supplier. In 2003, Amkor completed its scheduled full acquisition of the joint venture at Iwate Toshiba Electronics. Amkor’s J1 factory was the first fully independent OSAT facility in Japan, supporting Toshiba and more than a dozen other Japanese semiconductor companies. During the joint venture, the factory was expanded and now employs >800 people and produces >200 package formats.
While there are financial benefits to outsourcing assembly and test, perhaps one of the most significant factors driving OSAT in Japan is the opportunity to collaborate across the supply chain. IC designers are increasingly focused on system-level devices for portable and high-end consumer products. The development of new handsets requires much closer cooperation between the phone manufacturer, the IDM chip company, and IC packaging suppliers. Increasingly, packaging engineers are finding themselves in the middle of parallel design efforts as OEMs attempt to hit tight market-introduction windows at the lowest possible manufacturing cost without significantly driving up development budgets. Consequently, most Japanese semiconductor companies are increasing their focus on frontend technologies for wafer processing while working directly with OSAT suppliers to develop advanced packaging solutions, such as flip-chip and stacked-die packages.
James M. Fusaro recently served as senior VP for Japan sales. He is now the corporate VP of product management Group at Amkor Technology Inc., 1900 S. Price Rd., Chandler, AZ 85248; ph 480/821-2408, [email protected].