Is Packaging Leading the Return of Semiconductor Growth?
08/01/2003
By Jim Walker
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It appears that past history again may be an indicator that growth is returning to the semiconductor industry. In our cyclic world of semiconductors, an increase in sales for the outsourcing of packaging and test services usually has been an early indicator that the industry has bottomed and a return to growth is on the way.
Gartner Dataquest's final market share estimates for 2002 show that growth for the semiconductor assembly and test services (SATS) industry grew by 18 percent, reaching $8.35 billion in revenue. This SATS growth of 18 percent in revenue was substantially more than the overall semiconductor industry growth of 1 to 2 percent. Some of this growth can be attributed to the return of the OEMs and integrated device manufacturers (IDM) to outsourcing. Another contributing factor to the additional growth was renewed interest in transitioning to chip scale packages (CSP) and new advanced packaging concepts, such as flip chip and system-in-package (SIP).
The top players and their respective market share positions are listed in the Table. Amkor continued to remain in the top spot, with Advanced Semiconductor Engineering (ASE) a close second. Both continued to top the market with more than $1 billion dollars in revenue. ST Assembly Test Services (STATS) and Siliconware Precision Industries Ltd. (SPIL) experienced the highest growth rates. STATS achieved more than 55 percent growth, while SPIL achieved more than 35 percent growth.
The SATS industry accounted for 31.3 percent of the $26.8 billion spent on worldwide semiconductor packaging in 2002. The top 10 SATS companies accounted for 61.3 percent of the packaging and test revenue in 2002, which was down slightly from the 63.6 percent in 2001. On a packaging-only revenue basis, the top 10 companies represented 63.4 percent of the total revenue for outsourced packaging. On a test-only revenue basis, the top 10 companies for testing services represented 61.7 percent of the total outsourced test revenue.
Even with the tough economic times, many players remain in the SATS marketplace. There were 40 companies with packaging and test revenue of more than $20 million in 2002; however, this was down slightly from the 41 companies in 2001. Twenty-nine companies had revenue greater than $50 million in 2002, down one from the 30 companies in 2001. And 15 companies had more than $100 million in revenue in 2002, up one from the 14 companies in 2001. Indicative of the dominance of back-end assembly in the Far East, Asia-Pacific SATS companies continued to increase in market share over other regions in 2002. Taiwanese companies accounted for 40 percent of the SATS sales in 2002, with mainland Chinese companies accounting for another 9 percent. Companies whose headquarters are based in the U.S. accounted for 29 percent. As witness to the continuing shift to newer packages, revenue from advanced packages (BGA, CSP, QFN) for the top five contractors exceeded more than half of all their revenue, at 56 percent.
Fabless customers continue growing their portion of the business at SATS companies. Fabless companies accounted for 43 percent of the revenue received by the top 10 SATS companies in 2002. IDM/OEM customers accounted for the remaining 57 percent.
 Table 1. The SATS industry accounted for 31.3 percent of the $26.8 billion spent on worldwide semiconductor packaging in 2002. |
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Optimism Returns
The remainder of 2003 will bring continued positive growth for semiconductor packaging and the SATS industry. The economic holding pattern due to worldwide events in the first quarter has moderated. The recent rebound in the stock market is indicating renewed optimism in the economy. With demand returning and improvements in supply fundamentals having finally balanced in the first half of 2003, future growth can occur.
We anticipate that the SATS industry will see a growth of more than 20 percent by the end of 2003, with a more accelerated growth potential in 2004, as the entire semiconductor industry participates in the economic recovery.
JIM WALKER, principle analyst, may be contacted at Gartner Inc., 251 River Oaks Parkway, San Jose, CA 95134; E-mail: [email protected].