The trend toward smaller, thinner, and cheaper semiconductor packages is hastening the pace of outsourcing for chip assembly and test services by integrated device manufacturers and OEMs who'd rather spend their design resources on developing the technology that's core to their business.
According to analyst Jim Walker of Dataquest Inc., San Jose, as chips grow more complex, the packages required to house them are becoming more application-specific. Vendors today offer more than 800 different types of semiconductor packages, up from 250 in 1995, and just 30 styles 20 years ago.
As a result, the packaging industry is growing an average of 110% per year, while the outsourced portion is growing at nearly twice that rate, Walker said. Dataquest believes the packaging and test market will grow from $25.5 billion in 1999 to $36 billion this year, reaching $53 billion by 2003. The contract segment will expand from 26% of the total in 1999 to 29% this year, accounting for 38% in 2003, the market research firm projected.
Among the major packaging trends is the emergence of multichip packages, sometimes called system-in-packages (SIPs), which provide a lower cost, faster alternative for integrating complex systems that can't support the volume or afford the time to justify designing a complete system on one chip.
Walker said that within the next three years, 10% of all IC packages will have more than one die in them.
Another shift will occur as the move toward miniature, wafer-level packaging changes manufacturing requirements, and alters the business relationships between wafer foundries, test and assembly houses, and PCB manufacturers. According to Walker, this will drive a return to vertical or "virtual" reintegration, as consolidation and closer alliances develop to solve the outsourcing challenges.