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April 28, 2021

Production capacity for packaging and testing is tight, OSAT sweeps machines to prepare for battle

According to the Taiwan Media Business Times, the semiconductor packaging and testing capacity was severely tight in the first half of the year. The leading manufacturer ASE Investment and Control swept over thousands of wire bonding machines, and the machine equipment delivery time was greatly extended to more than half a year, which is equivalent to the expansion of wire bonding and packaging production capacity in the first half of the year. The increase is very limited. Due to the continuous influx of orders, ASE's production capacity will be full until the second half of the year, and orders for wire bonding and packaging including Huatai, Lingsheng, and Chaofeng are also jam-packed.

Generally speaking, orders in the first quarter will have to be queued up to the end of the second quarter to enter mass production at the earliest. After ASE's production capacity was severely tightened and prices were increased, the industry has followed up, and the price of wire-bonding and packaging will increase quarterly to the second half of the year. ASE Investment Holdings will hold a corporate briefing session at the end of January, and is optimistic about its operations in 2021. Its operations throughout the year will grow quarter by quarter, and revenue and profit will reach new highs.

Affected by the dual impact of the new crown pneumonia epidemic and insufficient chip supply, the shipments of packaging and bonding machines in the first half of the year have been limited. However, the leading manufacturers of ASE and Amkor have successively swept the machines. The lead time for packaging and wire bonding machines has been extended to more than 6 months. Among them, ASE Investment Control grabbed thousands of wire-punching machines, and the Nanzi Phase II plant fully expanded its new production capacity. However, it was necessary to complete the installation and start mass production of orders. The time point fell in the second half of the third quarter.

Due to the limited expansion of wire-bonding and packaging capacity in the first half of the year, orders from customers continue to emerge. In addition to the continued strong demand for mobile phone and laptop related chips, including game consoles, servers, 5G base stations, WiFi equipment, automotive electronics and other chips Packaging orders continue to increase. ASE has the world’s largest wire-bonding and packaging production capacity, which is still in short supply. The capacity gap is estimated to reach 30%. Second-tier packaging and testing plants including Huatai, Lingsheng, and Chaofeng are also fully loaded with orders. Order visibility has seen the first Three seasons.

As the production capacity of wire-bonding and packaging is tight and difficult to be relieved, after the price increase in the fourth quarter of 2020, ASE is expected to increase the price quarter by quarter in the first half of the year. The cumulative increase will be as high as 20-30%. Although the price increase has suppressed part of the excess The order is placed, but it still cannot withstand the continuous emergence of orders. For companies such as Huatai, Lingsheng, and Chaofeng, they have followed the pace of leading manufacturers to increase prices. With the full capacity of the entire production line, the industry is optimistic that there will be room for continued increase in packaging prices in the second and third quarters.

In the fourth quarter of 2020, the packaging production capacity has been tight. In the fourth quarter of 2020, ASE Group's consolidated revenue increased by 20.8% quarterly to 148.877 billion yuan, a record high, a growth of 28.3% compared with the same period in 2019, and maintained in the first quarter of 2021 In a positive view, the group’s consolidated revenue will be reduced by about 10% in the quarter, but it will rewrite a record high over the same period in the previous year. As for the second-tier packaging and testing industry’s revenue performance in the fourth quarter of 2020 better than expected, they maintain an optimistic view of the first half of the year. The legal person estimates that the revenue performance in the first quarter of 2021 will be roughly the same as the previous quarter, in the second and third quarters. After entering the peak season, the growth momentum will continue to strengthen, and there will be a significant growth rate compared to the same period in 2020.

TSMC takes the lead, packaging and testing plants explode

In the past, it was regarded as the most stable semiconductor packaging and testing industry. Driven by industrial consolidation and demand, the profit of many index-level packaging and testing plants in 2020 has reached a record high level. Under the leadership of TSMC, Taiwan’s packaging and testing supply chain is developing Carrying out the largest plant expansion plan in recent years, in response to business opportunities for continuous growth.

High-end process wafers are expensive, and semiconductor process miniaturization is becoming more and more difficult, and the cost is rising. In order to continue to improve the performance of future chips and the price will continue to decrease, even TSMC must develop advanced wafer-level packaging and build advanced technology in Zhunan The packaging plant will officially operate in 2021. President Wei Zhejia also said that the growth rate of advanced packaging and testing in the next few years will be higher than the overall average of TSMC.

According to the latest global packaging and testing rankings, through plant expansion and consolidation, Taiwan’s packaging and testing plants have 6 squeezed into the top ten packaging and testing plants, with a total market share of more than 60%. The largest Evergrande has a clear trend, and the packaging and testing output value is also Steady growth. Due to the increased demand for chips due to 5G, high-speed computing, Internet of Things, and electric vehicles, the foundry is fully loaded, and the production capacity of packaging and testing is severely tight. In addition to accelerating the expansion of the factory, the first response is to increase the price, such as packaging and testing. Leading ASE's packaging and testing business in the first half of the year has received full orders, and orders have exceeded production capacity. The packaging and testing prices have been increased in 2020Q4. The upward trend in 2021Q1 is still clear, and revenue will not be weak in the off-season, which will also increase gross margins and continue to make profits. growing up.

New demand has exploded, and TSMC leads the trend in advanced packaging, which drives the momentum of trend growth. Traditional packaging and testing plants win out by resource integration.

Closed beta starts again, looking for the next winner

The packaging industry, which used to be regarded as low-margin and low-growth, will be different from 2020. Many packaging and testing plants have achieved a record high since their establishment in 2020; at the same time, under the leadership of TSMC, Taiwan's packaging and testing supply chain is undergoing the largest expansion plan in recent years. "I have been in the industry for 27 years and it is the first time I heard all the big packaging and testing bosses say that it will be good for the next 10 years," said an equipment factory supervisor.

At the end of December, the Caixun interview team went to various places in Taiwan to observe the expansion of each plant. In Miaoli, TSMC’s fifth advanced packaging plant is rushing to build. The entire base is about 2 football fields. In Kaohsiung, the world’s largest packaging and testing plant ASE Investment and Control has announced that it will build 7 more in addition to the establishment of a 5G unmanned factory. The unmanned factory even has to challenge the scale of Samsung. In the future, it will hire 20,000 more people in Taiwan and become the largest employer in Taiwan.

Entering the Hukou Industrial Zone next to Zhuke, the world's 9th largest packaging and testing plant, Qibang Technology’s new plant building, has entered the completion stage; not far away, the world’s fifth largest packaging and testing plant, Licheng, also bought TSMC The old lighting factory is preparing to be converted into the most advanced panel-level packaging technology production base. Licheng CEO Xie Yongda said that the plant will be completed in the first quarter of 2021 and trial production will begin in 2022.

The expansion speed of high-end carrier boards is even more rapid. "High-end carrier boards are now very, very scarce, and even TSMC is worried about the shortage of carrier boards." A general manager of the packaging and testing plant said. In Taoyuan, we have also seen Xinxing’s new factory as huge as a giant ship. The main structure has been completed, and the most technically difficult ABF carrier board will be produced.

Not only are high-end manufacturing processes, but traditional packaging companies are also expanding their factories. Changke, which produces lead frames for semiconductor packaging, is also building a new factory in the Kaohsiung Export Processing Zone. Chairman Huang Jianeng said: "Order now, delivery will be scheduled for half a year later." In addition, Xie Yongda also revealed that Licheng's Chaofeng "has just built a factory in 2019, and it will be full in 2020. Rebuild the factory".

Now, the entire packaging and testing industry chain, from the highest-level wafer-level packaging to the most traditional wire-bonding packaging.

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