SANTA CLARA, Calif. -- ChipPac Inc. here and its former parent company, Hyundai Electronics Industries Co. Ltd. of South Korea, today expanded their ties by announcing a major service and supply agreement for silicon foundry customers.
Under the terms of a multi-year agreement, ChipPac will become the primary IC-packaging, assembly, and test provider for Hyundai's chip products. ChipPac will also provide package designs and technical support for Hyundai's wafer foundry customers.
The deal expands ChipPac's ongoing relationship with Hyundai. In 1999, ChipPac was spun out of Hyundai as an independent supplier of backend chip-assembly and testing services. Headquartered in Santa Clara, ChipPac has about 7,000 employees worldwide and operates plants in China, Korea, Malaysia and the United States. The publicly-traded company is aiming to take 20% of the market for chip-assembly and testing services by 2005 (see today's story).
ChipPAC has been a major contractor of chip-packaging services for DRAMs and other semiconductor products sold by Hyundia. The new agreement is part of Hyundai's efforts to position itself as a major player in the silicon foundry business, said Sang Park, president of Hyundai Electronics.
"This agreement is directly in line with our recently announced plans to become one of the leading foundry service companies in the world," he said, referring to Hyundai's target to become a $1 billion foundry supplier by 2002 (see July 14 story).
"ChipPac's worldwide customer sales and engineering support and its Korean location's proximity to our wafer fabs will provide a compelling turnkey solution to any prospective customer," Park said.
Today's announcement represents the latest alliance between a silicon foundry provider and a contract chip-packaging and -testing house. In recent years, major pure-play foundries have aligned themselves with one or more IC-packaging houses in order to reduce cycle times and provide customers with more cost-effective, one-stop shop services.
ChipPac's archive rival Amkor Technology Inc.--the world's largest IC-packaging house--provides wafer foundry services in a wafer fab in South Korea.
Most contract packaging houses do not operate their own wafer fabs, but they are closely aligned with chip-processing companies. For example, foundry supplier Chartered Semiconductor Manufacturing Pte. Ltd. and Semiconductor Assembly and Test Services are affiliated with a large Singaporean conglomerate, called Singapore Technologies.
In an arm's length relationship, silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) cooperates with Taiwan's largest IC-packaging company, Advanced Semiconductor Engineering Inc. (ASE). Taiwan's United Microelectronics Corp., the world's second largest foundry provider, has a close relationship with another local firm, Siliconware Precision Industries Co. Ltd.
Most, if not all, of the relationships between a silicon foundry and packaging house are non-exclusive.
In a recent interview with SBN, ChipPac president and CEO Dennis McKenna said his company also does business with TSMC, UMC, and other silicon foundry concerns. But McKenna believes Hyundai will become a major factor in the silicon foundry business. In fact, he predicted that Hyundai will become the world's third largest silicon foundry supplier in the future, surpassing Singapore's Chartered.
"This alliance with Hyundai will now create true one-stop shopping for semiconductor companies," he predicted.