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Outsourced IC packaging to reach $13.1B

Posted: 13 Nov 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Research and Markets? outsourced packaging? BGA? CSP? FC?

The market scale of outsourced IC packaging is estimated to reach $13.1 billion this year, with Taiwan gradually emerging as a powerhouse in the industry segment, according to a Research and Markets report.

As international IDMs speed up outsourced processing worldwide, CAGR for the segment will reach 168 percent between 2003 and 2009, said the report. Market share of specific package foundry companies rose to 29.5 percent in 2005 from 27.2 percent the previous year. For 2006, growth is forecast to reach 31.1 percent, 32 percent in 2007 and 33 percent in 2008.

Moreover, the report found the companies' total package also increased. From 28.86 million units in 2004, it reached 31.83 million units in 2005, and is set increase to 37.19 million units this year, to 43.06 million units in 2007 and 49.24 million units in 2008.

Pivotal player
Among the top 10 global packaging and test companies are six companies from Taiwan, said Research and Markets. If ranking are based on profit scale, nine Taiwan package and test companies might be listed in the top 10, positioning Taiwan as key player in the test and packaging industry.

However, Japan often performs well in the IC substrate field, so tight business relationship between Taiwan and Japan is formed as Japanese companies transfer their technologies to Taiwan when there is inadequacy in production capacity. At present, about 95 percent of electronic technologies in Taiwan, including packaging but not limited to, are from Japan.

The report points out that the simultaneous mastering of both global and advanced IC wafer foundry and IC advanced packaging technologies enables Taiwan to achieve its current status in the global IC industry.

Meanwhile, Taiwan's large packaging and test companies often merge and purchase small ones when developing, said the report. Or some form incorporate virtual group. Sound in capital market and excellent in integrating, Taiwan companies are flourishing in mergers and acquisitions. This also contributes to the overall success of Taiwan's packaging industry.

Packaging enterprise
Packaging accounts for five to 25 percent of the total cost of a complete semiconductor product, and such proportion may increase as technology advances. Manufacturers focus their attention to core advantages such as design, R&D and marketing to cope with competition from rapid product updates and are rather conservative in extending produce capacity of back-end packaging. Such situation leads to outsourced packaging is going mainstream, the report found.

Meanwhile, package foundries invest in new technology R&D as new IC products demand advanced packaging. Outsourced packaging such as BGA, CSP, FC, QFN and SiP are all fairly advanced. However, supply never meets demand in the packaging industry due to high capital investments and strong technological R&D capability required to start a packaging facility. The report found that such leads to advanced package companies getting a higher gross profit margin, from about six percent in 2001 to 20 to 35 percent at present.

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