The global IC packaging and testing market has stopped falling and rebounded, the reasons behind it are not simple
In the third quarter of 2019, the packaging and testing industry showed signs of recovery. According to the latest report of the Institute of Industry Research, the revenue of the top ten packaging and testing vendors in the world in the third quarter of 2019 is estimated to be 6 billion US dollars, an annual increase of 10.1%, a quarterly increase of 18.7%, the overall market is stopping to stabilize. In addition to the cyclical factors such as the traditional peak season, the release of new kinetic energy such as 5G, changes in the supply system, and the evolution of packaging technology are all regarded as important driving forces for the stabilization and recovery of the packaging and testing market.
Five factors promote the stability of packaging and testing vendors
The recovery of the packaging and testing market is the result of a combination of five factors, including supply chain testing, terminal side, manufacturer side, investment side, and changes in the storage market structure.
The first is the need for domestic manufacturers to improve their supply chain control capabilities. In July of this year, the industry chain reported that Huawei Hisilicon transferred some of its packaging and testing orders to domestic manufacturers such as Changdian Technology and Huatian Technology to increase support for the domestic supply system. CCID Consulting Senior Analyst Chen Yuenan told the reporter of China Electronics News that the trend of the semiconductor industry chain to China Mobile is strengthening, driving local order demand and strengthening domestic packaging and testing vendors, including foreign packaging and testing vendors established in China. Profit performance.
The downstream terminal demand also led to the stabilization of the packaging and testing market. TrendForce analyst Wang Zunmin told reporters that mobile phone sales have gradually stabilized and that sensors such as IoT NB-IoT have been gradually introduced from 2019, which has also promoted the development of the packaging and testing market at this stage.
At the same time, domestic packaging and testing vendors have increased their attractiveness to customers by acquiring a wealth of technology categories. For example, Changdian Technology has enhanced the packaging technology capabilities of Fan-out and SiP through the acquisition of Singapore company Xingke Jinpeng, meeting the needs of 5G chips for system integration and antenna integration technology.
The industry's increased investment in advanced packaging technology and 5G application chip testing capabilities is also bringing benefits to the packaging and testing market. According to the latest report by the International Semiconductor Industry Association and Tech Search International, technologies such as bumps, wafer-level packaging, and mobile devices, high-performance computing, and 5G applications are driving continuous innovation in the packaging and testing foundry industry.
Changes in supply and demand in the storage market have also become influential factors. Chen Yuenan said that due to the decline in memory prices, upstream manufacturers' inventory corrections, Samsung released some memory inventory, coupled with semiconductor friction between Japan and South Korea, which resulted in limited supply of memory materials from Korean factories, and Samsung's memory supply was tight, giving Chinese storage manufacturers and packaging and testing manufacturers Provide more market space.
5G brings new opportunities and challenges to packaging and testing
As a new generation of communication technology, 5G's driving effect on the semiconductor industry is self-evident. The Taiwan Industrial Research Institute predicts that because millimeter waves need to integrate antennas, RF front-ends, and transceivers into a single system-level package, 5G high-frequency communication chip packaging will develop into AiP technology and fan-out packaging technology in the future.
A report from the Takuya Industrial Research Institute shows that the main growth momentum of Jingyuandian in the third fiscal quarter came from packaging needs such as 5G communications, CMOS image sensors, and AI chips. Driven by 5G communications, automotive and consumer electronics packaging demand, ASE's revenue performance has gradually stabilized. Sun Hongkong Investment and Finance Chief Financial Officer Dong Hongsi said in the financial report that due to the development of 5G, the demand for new product packaging and testing in the first quarter of next year is strong, and Sun Moonlight's revenue performance is expected to be better than previous years.
The driving role of 5G in packaging and testing is mainly reflected in the increase in chip usage and the increase in chip added value.
5G's drive for chip volume can be seen at two levels. First, 5G deployment has increased the market demand for mobile terminals, sensors, and base stations. Wang Zunmin pointed out to reporters that 5G communications will become an important indicator for increasing packaging and testing revenue in 2020. The successive release of 5G mobile phone SoCs by terminal manufacturers will lead the trend of new 5G mobile phones. With the deployment of 5G communications in various countries, the demand for base station equipment construction will also increase significantly. 5G will increase demand for packaging and testing related to mobile phone chips and base station equipment. The second is the increase in chip usage caused by the packaging process. Chen Yuenan pointed out to reporters that the traditional package contains about 10 to 15 heterogeneous chips, and the content of 5G RF silicon will increase by more than 4 times, and the demand for packaging and testing will increase accordingly. In addition, 5G covers millimeter waves in the new frequency band, requiring higher density chip integration to reduce the loss of the signal path, packaging and testing must find low-loss materials, and adjust the chip's space structure. These adjustments will lead to more complicated chip processes, increase added value and chip unit prices, and promote the scale of the packaging and testing market.
New technologies and new trends will become the focus of competition
Driven by the massive demand in potential markets such as 5G, intelligent connected cars, and AI, many research institutions are optimistic about the global semiconductor boom in 2020. As one of the main links of the semiconductor industry chain, how packaging and testing manufacturers seize new technology points and improve their profitability has attracted the attention of the industry.
The evolution of technology needs to keep pace with industrial development nodes, as does the packaging technology. Chen Yuenan pointed out to reporters that packaging technology with potential still faces 5G and AI-related high-density, low-loss, high-performance packaging. For example, silicon-based fan-out packages for RF chips, wafer-level system-level packages for IoT smart sensors, and high-power IGBT module packages for smart connected cars will all have significant requirements. In addition, domestic memories such as Changxin Storage and Yangtze River Storage are actively advancing technological progress. BGA chip packaging and DRAM packaging for 3D NAND will drive the increase in packaging volume. Wang Zunmin also said that the current development process of the packaging and testing industry is mainly focused on SiP. Due to the trend of end product performance improvement and volume reduction, packaging technology needs to continuously increase components with different functions and shrink the size. Packaging and testing manufacturers try to increase the overall packaging and testing density and product performance through stacking and integration.
Experts suggest that packaging and testing vendors can maintain profitability in terms of technology, capacity, and operations. Chen Yuenan said that the packaging and testing technology upgrade methods mainly include self-development and mergers and acquisitions. M & A upgrades to manufacturers can often be realized in a shorter period, but the manufacturers 'own technology research and development, technical indicators, and packaging processes must meet the 5G and AI major players' processes. demand. There is also a reasonable control of production lines, which cannot blindly expand production capacity, resulting in price competition and profit fluctuations. In addition, while strengthening the competitiveness of domestic manufacturers, domestic manufacturers must also see the direction that cannot be achieved domestically and align with the international advanced technology level. In terms of operating models, Wang Zunmin said that if a company is to be profitable, it must open source and reduce expenditures; try to reduce personnel, plant and equipment costs, re-examine its own technical capabilities, focus on improving packaging and testing technology and quality, and obtain customer trust and orders.
Editor-in-chief: Zhao Qiang