Outsourced IC Packaging Estimated to Grow to $13.1 Billion in 2006

Outsourced packaging becomes the mainstream as prices of semiconductors are fluctuating because of the continual advent of new products and the shortened lifecycle. In view of the cost of a complete semiconductor product, expense on packaging accounts for 5 to 25 percentage of market price of one semiconductor unit; however, as technology advances, the proportion of packaging cost to the whole cost becomes higher.
The packaging technology becomes so complicated and so many packaging methods available, one single international semiconductor company of IDM will find it hard to meet the increasing market demand.

In the outsourced packaging and test market, large international IDM companies shift their attention to core advantages such as design, R&D and marketing when facing fierce competition results from the rapid updating of products. Meanwhile, large international IDM companies become far less profitable under the influence of universal recession in the industry. Therefore, they sharply decrease their capital expense on semiconductor produce capacity and are rather conservative in extending produce capacity of backend packaging.

Meanwhile world class package foundries continually invest in new technology R&D as advanced package demands are brought about by new IC products. As a result, large international IDM companies are more dependent upon advanced packaging technology of package and test foundries. The market scale of outsourced IC packaging, as estimated, is to grow up to 13.1 billion in 2006. As international IDM companies speed up outsourced processing worldwide, CAGR will reach 168 percent between 2003 and 2009. According to ETP, market share of specific package foundry companies in package market increased from 27.2 percent in 2004 to 29.5 percent in 2005, and will increase to 31.1 percent in 2006, 32 percent in 2007 and 33 percent in 2008. Their total package also increased, from 28,860,000 units in 2004 to 31,830,000 units in 2005, and will increase from 37,190,000 units in 2006 to 43,060,000 units in 2007 then 49,240,000 units in 2008.

Taiwan is gradually becoming a power in the packaging and test. Among the global top ten packaging and test companies, six are from Taiwan, all of which are performing well in both revenues and profits

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