IFTLE 238 ASE & the Apple watch, ASE / TDK JV; China: the Wild Card
By Dr. Phil Garrou, Contributing Editor
ASE rumored to get Apple watch SiP order
Rumors are that ASE has won the contract to package the S1 processors for Apple Watch using SiP packaging to reduce overall dimensions achieving the required compactness necessary in the watch [link]. Apple appears sold on the technology after implementing it last year in Apple WiFi chips and fingerprint recognition chips also packaged by ASE. Apple indicates they are “…quite optimistic about the commercial potential of SiP” and “…plan to build SiP devices into half its iPhone 6S in the second half of 2015 and all iPhone 7, which reportedly will go on sale in the 3Q 2015.
In related activity, ASE announced that it will be spending $3-6B to double its SiP production capacity over the next 3 years. [link]
ASE and TDK form JV to Address SESUB Embedded Packaging
ASE and TDK have announced an agreement for a JV (ASE Embedded Electronics Inc.), based in Kaohsiung, to manufacture IC embedded substrates using TDK’s SESUB (Semiconductor Embedded Substrate) technology [link].
TDK has been producing SESUBs internally for a little over a year, but has entered into this JV “…to meet the anticipated increase in demand”…and take advantage of ASE skills in the area of “…assembly of IC packages, and … a world-class performance record in product testing.”
SESUB is a high-end substrate technology where thinned semiconductor chips are embedded in laminate substrate with copper interconnection down to 20µm minimum L/S. The thickness of the substrate including the integrated semiconductor chips is just 300 µm.
Multiple chips can be embedded side by side to produce MCP /SiP products. Discrete components can be mounted on the top of the substrate. Since the copper layers that form the interconnect are defined by photolithography, their dimensions can be controlled to enhance thermal performance of the modules.
Below are examples of (A) Maxim Power Management Unit (PMU) Module and (B) Bluetooth module.
China: The Wild Card
When we look at what’s going to happen in the Semiconductor industry in terms of consolidation the wild card is always China. It has been well publicized that China national policy is to acquire and grow in this area. China represents about one-third of the approximately $330 billion global IC market, however, domestic production supplies only 10 present or so of its demand.
China’s government policy “National Guidelines for Development and Promotion of the IC Industry,” which was released in June of 2014 calls for expansion and vertical integration of the domestic semiconductor value chain. The Ministry of Finance, the Ministry of Information Industry (MII) and the National Development and Reform Commission support the targets of achieving domestic sales revenue of $56B by 2020 and reaching the technology level of international “tier 1” companies by 2030 [link].
Initially, the government investment fund has about $20B. Over the next decade, however, most expect to see $100B stimulation across the Chinese semiconductor ecosystem.
According to John Pitzer, managing director at Credit Suisse, speaking at the “Wafers to Wall Street” SEMI forum in San Jose, China’s intention to increase domestic semiconductor production represents the single most significant risk factor to U.S. semiconductor industry dominance [link]. He believes that significant intellectual property and R&D barriers will constrain China’s domestic technology development and mitigate some of the intensity of its domestic growth ambitions. However, the accelerated policy-backed Chinese merger and acquisition activity and an active Chinese R&D university agenda presents a longer-term risk in the industry. Recall in IFTLE 222 we have discussed Chinese intent to become an acquisition “predator” in microelectronics.
Pitzer noted that China is planning semiconductor industry investment of $170B in an attempt to reduce dependence on semiconductor imports. Potential M&A of U.S. companies appears to be a near-term theme. Consequently, he expects to see more Chinese companies collaborating with leading U.S. companies and more overseas M&A from China.
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