WILL OSAT FOLLOW THE FOUNDRY GROWTH MODEL?
I recently came upon an article citing a prediction made by industry research firm IDC for the expected growth of the semiconductor market in 2013. Although IDC’s figure of a 3.5% expansion for this year is slightly more optimistic than ATREG’s expectation of 2.0%, it further underlines the general industry opinion of the continued anemic growth the semiconductor sector has experienced in recent history.
While the third consecutive year of virtually flat growth is a big letdown for the industry as it continues to mature, certain segments of the market are finding impressive growth opportunities in the midst of this evolution. As outlined in ATREG’s recent thought-leadership paper The Inflection Point: Macro Forces & Emerging Trends That Will Reshape The Semiconductor Industry Through 2016, top foundries are capturing a significant portion of the margins of their fabless and IDM customers as bleeding-edge technology becomes increasingly more prohibitive to manufacture in-house. According to Gartner, the foundry market grew by 16.2% in 2012, a remarkable increase in the context of an overall industry contraction of 2.5%. This expansion was driven primarily by the need for advanced chips for mobile applications whereby foundries with a sound yield of 28nm and 40nm technology were able to ride the boom en route to solid revenue growth.
One would expect the outsourced back-end sector to closely mirror the current dynamics of the foundry market. After all, the upswing in advanced mobile chips typically means greater chip assembly, testing, and packaging volumes. Historically, there has certainly been a strong correlation between the OSAT and foundry market growth. From 2003 to 2011, the OSAT and foundry industries mirrored each other almost perfectly, with a CAGR growth of 9.6% and 9.2%, respectively. 2012 proved to be a vastly different story. While the foundry market expanded by 16.2%, the revenue growth of the OSAT market amounted to just 2.1%.
So what led to such a strong divergence in 2012? Gartner noted that while the foundry market led by TSMC enjoyed the spoils of an uptick in the yield and demand of advanced chips driven by the mobile sector, back-end firms suffered from an oversupply of both advanced and traditional packaging capacity stemming from over-investments in 2011 and 2010, thus creating a weaker pricing environment and lower factory utilization. Despite the slowed growth or perhaps in anticipation of it, OSAT companies continue to invest in transitioning from gold to copper wire bonding in an attempt to reduce the cost of packaging processes and protect their margins. While this may provide a solution in the short term, the longer-term opportunity lies in the migration to advanced packaging solutions that allow enhanced device performance and form factors while also providing improved gross margins. With such companies as ASE, SPIL, and Amkor leading the charge in terms of flip chip and advanced packaging revenue, the OSAT sector is showing signs of possible upswing and may be looking at a brighter future.
President / Managing Principal
ATREG ADVISES MICRON ON 200MM ITALIAN FAB SALE
ATREG is pleased to announce that it has successfully advised Micron Technology, Inc. in the sale of its semiconductor manufacturing subsidiary whose primary asset consists of an advanced 200mm CMOS image sensor fab based in Avezzano, Italy.
The facility was purchased by LFoundry, a German analog mixed-signal and specialized technologies foundry.
As part of the agreement, Micron assigned the buyer its supply agreement with Aptina to manufacture image sensors at the Italian facility.
ATREG ESTABLISHES TEAM IN JAPAN
ATREG is pleased to announce it has established a team in Japan with the recent appointment of Yoshimichi Takizawa as Director, Client Engagement, Asia. Based in Tokyo, Takizawa-san brings extensive semiconductor industry experience to the company. He started his career in 1969 as Staff Engineer at Fuji Electric Co., Ltd., engaged in the development and production of semiconductor devices. For the next 40 years, he went on to serve in a variety of positions starting in 1980 with Assistant Manager, Sales Development for Fuji Electronic Components KK (FEC), a joint-venture between Siemens and Fuji Electric selling Siemens products in Japan via Fuji’s existing sales network. He then became General Manager, IC Marketing Department in 1988 until 1995.
During that time, Takizawa-san evaluated Japan’s market potential for Siemens products and successfully brought two products (power MOSFET and autofocus IC) into local production. He was nominated to FEC’s board of directors in 1994. In 1995, FEC changed its name to Siemens Components KK, and until 1999, Takizawa-san served as Director of Strategic Planning, responsible for Japanese operations and marketing strategy, including new product promotions (DRAM, MCU, automotive ICs, mobiles phone devices, power devices), corporate sales operation programs, mass market strategy, and key account management.
In April 1999, Siemens Semiconductor Group also span off to become the company known today as Infineon Technologies AG. In October 1999, Siemens Components KK in Japan was renamed Infineon Technologies Japan KK (IFJ). For the next two years, as Director and General Manager of Sales for IFJ, Takizawa-san took charge of all the company’s sales and marketing activities, including channel strategy and new product introductions to the Japanese market.
From 2001 to 2005, Takizawa-san served as President and CEO of EPCOS KK, the Japanese subsidiary of EPCOS AG, a division of Siemens AG that span off in October 1998. During his tenure, the company’s revenue grew from 1.7BY (2001) to 2.4BY (2005), a record for electronic components from Germany in 24 years. In 2005, Takizawa-san returned to Fuji Electric and until 2012 was responsible for the company’s Business Development Division, leading strategic planning and alliance projects with Freescale, Microsemi, and Fujitsu to name just a few.
Takizawa-san holds a BS degree in metallurgy (electro-chemical science) from Tokyo University’s Faculty of Technology, Japan.