Subcontractor Update: Positive Signs
01/01/2003
BY JEFFREY C. DEMMIN
Business has taken a distinct upturn in the last six months at the major assembly and test subcontractors. The financial results from the third quarter of 2002 actually are quite similar for several of the largest companies in the field.
 |
There remains a wide range in the revenue of the subcontractors, of course, but there is a common trend across the industry. Figure 1 shows the recent quarterly revenues at seven of the largest companies, and they all show a healthy jump from Q1 of 2002 to Q2, with a more modest gain or an effective plateau following in Q3. This reflects the waning momentum of the semiconductor industry rebound that started in 2002 but never developed into the boom that everyone hoped.
 Figure 1. Quarterly revenue at assembly and test subcontractors over the last three quarters. |
null
Table 1 ranks the seven subcontractors according to their relative business in Q3 compared to Q1. All show measurable growth, with STATS leading the pack at 60 percent revenue growth in the last two quarters, followed closely by OSE.
A longer time scale again shows similar trends at all of the subcontractors evaluated here. Figure 2 compares Q3 revenue in each of the last three years, and all the companies show a "tilted V" — a big drop from 2000 to 2001, with large growth in 2002 that does not quite reach the level of 2000. Table 2 ranks the companies in a comparison of Q3 revenue in 2002 to the revenue in that quarter during the boom year of 2000. This measure of the quality of the rebound in business shows SPIL in front with Q3 2002 revenue within 5 percent of Q3 2000 revenue.
 Figure 2. Q3 revenue at assembly and test subcontractors over the last three years. |
null
In spite of the surprisingly similar revenue trends among the subcontractors, larger differences appear in the profit/loss column. ASE and SPIL remained in the black, with modest profits of $9.3 and $1.0 million, respectively. STATS, ASAT, Amkor and ChipPAC all reported losses in Q3 of 2002, but managed to trim them significantly from the second quarter. ASAT, in particular, cut its losses from $62.4 million in Q2 to $3.9 million in Q3. Amkor is getting a handle on the financial situation brought about by ambitious expansion and an investment in Anam Semiconductor, and cut its losses by 20 percent.
 |
While there is still some bleeding at the majority of large assembly and test subcontractors, the business definitely has rebounded significantly. Most are predicting approximately flat results in the following quarter, with the cost-cutting measures of the downturn helping the bottom line.
Jeffrey C. Demmin, editor-in-chief of Advanced Packaging Magazine, may be contacted at 98 Spit Brook Rd., Nashua, NH 03062; (603) 891-9353; E-mail: [email protected].