AsiaFocus

06/01/1999

In Taiwan fashion, Singapore seeks Silicon Island status

For some time now, Taiwan`s semiconductor industry has been able to crow about having the design, wafer processing, assembly, test, and end-user sectors all in close proximity on its island.

Now Singapore is vying for the same Silicon Island status and its government is driving development of the region`s chipmaking infrastructure. Singapore`s Economic Development Board has targeted miniaturization as one of the island`s core competencies, and is using R&D funding and tax incentives to encourage both multinational corporations and local firms. Chartered Semiconductor Manufacturing Ltd. (CSM) - which operates five foundries on the island (two are joint ventures) - and ST Assembly Test Services Ltd. (STATS), a major assembly and test subcontractor, are both under the government-owned Singapore Technologies Group.

While CSM - the flagship of this Silicon Island - has been behind on the foundry technology curve compared with its larger competitor Taiwan Semiconductor Manufacturing Co., a number of technology transfer and licensing deals in recent months have closed the gap.

In addition to securing a high performance CMOS process from Motorola and forming a partnership network with four leading EDA vendors, CSM is working with Lucent Technologies to jointly develop advanced 0.18?m and 0.16?m processes for copper and aluminum interconnects. The Lucent collaboration is seen as a coup for CSM; industry observers believe Chartered`s successful joint venture fab with Lucent - Silicon Manufacturing Partners - and Singapore`s reputation for protecting intellectual property rights were two key factors that gave Lucent confidence to collaborate on such advanced IC technologies.

A key aspect of the Silicon Island concept for Singapore is capturing the entire food chain of semiconductor production. To that end, the existence of assembly and test houses, equipment, and materials suppliers is important. "The whole food chain after the fab really needs high-end product, high-end assemblers [and testers]. Having a fab here by itself is not good enough," says John Briar, STATS VP, array/laminate technologies.

He argues that only those semiconductor contractors able to "get the full product value in their door" will prosper. That even includes delivering the finished product to the end-user customer. "We are doing products from fab all the way to drop ship right now. Customers don`t see product, they don`t pack boxes, they only get an invoice," says Briar. To support its drop shipment program, STATS has devoted 30,000 sq. ft. of its new 560,000 sq. ft. facility to warehousing and packing.

Reducing shipping cost and time is another benefit of locating all industry sectors on one island. "You don`t want to be shipping probe wafers somewhere else for assembly and back in for test," says Briar. "You are just increasing product cost without adding any value."

The Singapore facility claims to be one of the few packaging houses that has successfully made the transition from test to assembly. Not that it has given up on test: STATS tests about 40 million devices/month, and assembles 15 million-20 million. While STATS is keen to secure more assembly work, it prizes its test business because of the higher profit margins it brings.

What`s more, STATS doesn`t rely on sister fab CSM for all of its business. About 50% of its wafers come from rival foundry TSMC. In addition, STATS expects to form new business alliances with TSMC and Royal Philips Electronics, which together are planning a new joint venture fab in Singapore.

While there are clearly enough fabs in Singapore to feed the assembly and test operations, the infrastructure in raw materials and equipment vendors to support the packaging side is developing, too. In March, Kulicke & Soffa Industries announced its intention to set up a Singapore factory to build wire bonders. Die and wire bonder makers ESEC and ASM Technology Singapore, a unit of ASM Pacific Technology, Hong Kong, also have local operations.

Behind the scenes, the Singapore government is allocating resources to beef up the island`s expertise in semiconductor packaging. The Institute of Materials and Research Engineering (IMRE), together with the well-established Institute of Microelectronics (IME), work in concert with industry on R&D programs. In addition, a local Materials Research Society of Singapore was established in January. "With the forging of these industry and institutional alliances I think Singapore is positioning itself to be a center of excellence [in packaging]," says Charles Vath, director of packaging technology for ASM Technology Singapore Pte Ltd. With the industry approaching ultra-fine pitch bonding where bond pad pitches are 45-50?m, Vath argues that there is a need to understand more about materials and their behavior under certain conditions. "It`s not just mechanical engineering or electrical engineering anymore, but it`s materials that are becoming more and more key to any success in the electronics business," he says.

Like most others in the industry, Vath doesn`t see Singapore as a major center for chip packaging production, despite the presence of STATS and some multinational assembly and test operations like National Semiconductor and Siemens Components.

Rather, he sees Singapore as a center for equipment design, process, and materials development, acting as a knowledge base for the rest of the Southeast Asian region. "You need to have the doers and you need to have the enablers, and Singapore will probably be positioned as an enabler for its neighbors who are then going to be capable of providing the volume [production]."

For its part, STATS stays competitive in Singapore - a costly region by many standards - by focusing on high-end packaging technologies like plastic BGA and enhanced BGA. The PLCCs and QFPs that it handles are typically high pin-count devices.

One local Singapore operation that is contributing to the island`s packaging infrastructure and development is the Flextech Group. In addition to providing probe cards as well as production equipment for the finishing stages of IC packaging, Flextech`s Flexera subsidiary is focused on chip scale packaging (CSP), specifically the ?BGA developed by Tessera. Flexera has a license for TCMT (Tessera Compliant Mounting Tape) and has the facilities to provide ?BGA prototyping services.

Although uBGA has not gone into high volume production yet, Flextech executive director P.S. Tang is hopeful that its acceptance by RAMBUS DRAM will give it a boost. "If microBGA is the package of choice for DRAM, flash, and hopefully other devices, then we see Singa pore becoming a big microBGA center," he says.

Flextech`s semiconductor equipment business is focused on what Tang describes as "a new philosophy of buying equipment." For packaging subcontractors wanting to expand their current capacity, "it is wise for them to have flexibility so they can deal with both old and new package types," he notes.

Tang believes that CSP will be a boost for Singapore`s packaging industry. He notes, "Anything that is new and requires high level technical content is good for Singapore." In fact, new technologies like CSP have helped Singapore maintain its position as a packaging center, particularly because much of the lower complexity parts such as SOICs, DIPs, and even some QFPs have already moved out of Singapore to areas with lower labor costs like Malaysia.

ASIA BRIEFS

ASM Lithography, Veldhoven, The Netherlands, has opened a new subsidiary in Hong Kong to manage its business activities in the Asia-Pacific region. ASML Hong Kong will serve as regional headquarters, with separate offices being established in Hsinchu City, Taiwan; Seoul, South Korea; Tokyo; Singapore; and Shanghai, China.

After three years of planning, the Shanghai Hua Hong NEC Electronics joint venture fab in China has started ramping production about seven months ahead of schedule, outputting 64Mb DRAMs at a rate of 5000 wafers/month. The 200mm, 0.35?m operation will increase production to 16,000 wafers/month next year, and to 20,000 wafers/month in 2001. Product mix is split between DRAMs and logic devices.

Taiwan Semiconductor Manufacturing Corp. said its net sales for the first quarter ending March 31 totaled NT$12.5 billion (about US$378.8 million), down 20.6% from 1Q98, but up 7.9% from 4Q98. For the month of March, net sales totaled NT$4.939 billion, down 1.3% from year-ago levels, but up 32.9% from February. Capacity utilization in the month was above 90%; for the quarter, utilization was 88%.