January 28, 2013, anysilicon
Semiconductor Assembly and Test Services are converting rapidly into a pure outsourcing mode of operation. While today perhaps only 50% of the market is using Outsourced Semiconductor Assembly and Test (OSAT, or SATS) this number is set to increase in the future.
While many of the low-end suppliers are competing on price-driven products the top 4 leaders (ASE, AMKOR, STATS and SPIL) are chasing the big expensive packages that requires large investment and new technologies. In fact, packaging has become gradually as complex and as costly as silicon technology. As the industry is moving to 3D packaging solutions there will be numerous cases where the package cost will be higher than the silicon cost.
ASE, AMKOR, STATS ChipPAC and SPIL are competing on packaging, assembly and test markets for the last 10 years. These 4 leaders are constantly developing new technologies and business models to generate economic profit.
In the future a massive investment will be required in order to support new trends and technologies, therefore, many analysts believe a market consolidation will be required. Investment in copper wire, 3D packaging and TVS, just to name a few, requires very deep pockets.
Let’s look at the top four assembly companies: ASE, Amkor, SPIL and STATS ChipPAC in more detail.
The top companies and their respective sales positions are shown in the graph; it covers their financial growth from 2002 to 2011. ASE continues to remain in the top spot, with AMKOR, STATS ChipPAC and Siliconware Precision Industries Ltd. (SPIL) in second, third and fourth places respectively.
We believe that the SATS industry will see a growth in the following years due to the shift into outsourcing model and due to the increase in complex package cost.