Packaging Equipment Market Outlook
OSAT Copper Wire Bonding Adoption a Key Factor in Spending
By Clark Tseng, SEMI Industry Research and Statistics
According to the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS) data, the worldwide packaging equipment market recorded a revenue spike of $3.88 billion in 2010, a 176% growth over 2009. Investments from China, Taiwan, and Southeast Asia had been particularly strong because Outsourced Semiconductor Assembly and Test (OSAT) companies in these regions rode the tide of a fast market recovery and also the copper wire transition.
Spending on assembly and packaging equipment will cool some in 2011. SEMI forecasts the market to decline 18% this year to $3.2 billion, which still exceeds the spending level of 2007 with $2.8 billion. We believe the composition of capital spending plans this year will be more on technology buy than on capacity buy. China remains the largest market for packaging because of the expanding IDM (Integrated Device Manufacturers) and OSAT presence there. Taiwan is home to leading OSAT companies and is forecasted to be the second largest market in 2011.
Among the OSAT players, Taiwanese companies have been very aggressive driving copper wire bonding adoption and building copper wire capabilities. Early adopters, which mainly came from fabless semiconductor companies especially in Taiwan and China, have been driving the migration to copper with the help of Taiwanese OSATs. Taiwanese OSAT players were able to seize momentum and made quick investment decisions to deal with the rising demand. That resulted in fast capacity buildup of copper wire bonders in the past few quarters among leading OSAT players. Major OSAT players in Taiwan are very optimistic about the copper wire market outlook. ASE and SPIL, for instance, expect to have copper wire package revenue contribution grow from 10%-20% at the end of 2010 to around 50% of overall wire bonding revenue by the end 2011.
Semiconductor unit demand will drive further investments in packaging technology, and given the single-digit semiconductor industry growth currently expected for 2012, spending on packaging equipment is forecasted to be in the $3.0 billion to $3.3 billion range for next year. And in this market of rising packaging and material costs, coupled with technology transitions, IDMs are expected to accelerate outsourcing of their assembly and test business to OSAT partners.
For information on SEMICON West 2011, visit www.semiconwest.org. For information on Packaging sessions at SEMICON West, visit http://www.semiconwest.org/Segments/Packaging. For information on materials, visit http://www.semiconwest.org/SessionsEvents/Materials.
Portions of this article were derived from the SEMI Worldwide Semiconductor Equipment Market Statistics (WWSEMS) and the Material Market Data Subscription (MMDS). These reports are essential business tools for any company keeping track of the semiconductor equipment and material market. Additional information regarding this report and other market research reports can be found at www.semi.org/marketinfo.
July 5, 2011