Five Trends In IC Packaging

At one time, chip packaging was an afterthought. Chipmakers were more worried about IC design. Packaging was considered a mere commodity, which was simply used to house the design.

More recently, though, chip packaging has become a hot topic. The IC design is still important, but packaging is a key part of the solution.

In fact, the industry can go down two paths. The traditional way is to scale a device. Today’s latest chips are migrating from 16nm/14nm to 10nm/7nm. A monolithic device, which would still require a package, would sit on the board.

The other way to get the benefits of scaling is to put multiple and complex devices in an advanced package. Some call this heterogeneous integration. Intel refers to it as on-scale packaging. The advanced forms of heterogeneous integration involve 2.5D/3D, fan-out and system-in-package.

As it turns out, the industry is going both directions. Clearly, it depends on the application. Some devices require the monolithic approach. Others are moving into an advanced package.

Where is this all heading? To gain some insights, I recently attended two IC packaging events. The first was the International Wafer-Level Packaging Conference (IWLPC). The second was the ASE Tech Forum.

In no order, here are my five takeaways from these and other recent events:

Advanced packaging gains steam
OEMs continue to leverage advanced packaging to boost the performance of their systems.

Case in point: The latest iPhones from Apple use an advanced packaging technology called fan-out to house its application processor. It allows Apple to provide a smaller package with more performance. TSMC builds the chip on a foundry basis for Apple. TSMC also houses the device using its fan-out packaging technology.

Then, Intel recently announced its new Core X-series of microprocessors. Intel offers them as standalone devices. Here’s the big news: In one configuration, Intel combines a mobile version of the processor with high bandwidth memory (HBM2) and a discrete graphics chip from AMD–all in a single package.

The fact that Intel and AMD are working together is interesting. The other news is that these devices are connected using Intel’s silicon bridge technology, dubbed Embedded Multi-Die Interconnect Bridge (EMIB). EMIB is another form of advanced packaging.

It’s a sign of more things to come from OEMs and chipmakers.

OSATs Verses Foundries
Intel and TSMC have been in the IC packaging business for some time. Samsung also develops packages.

In many respects, the three foundry vendors compete against the OSATs in the packaging arena. The foundries don’t compete in all packaging areas. But they compete at the high-end of the business.

And there is evidence the foundries are grabbing some of that business, at the expense of the OSATs. TSMC, for example, has been successful in the fan-out business, thanks to one customer—Apple.

The OSATs haven’t hit the panic button–yet. But clearly, they are keeping a close eye on the foundries, putting them on edge.

Automotive is hot
Packaging houses are looking for new areas of growth. The mobile market is still the largest segment, but this business is slowing.

What’s the next big thing? Is it AI, IoT or machine learning? Those are all growth markets.

As it turns out, though, packaging houses are all racing to develop new packages for the automotive market. As before, automotive OEMs use chips based on the traditional and reliable packaging interconnect techniques, such as flip-chip and wirebond. Recently, though, OEMs also want fan-out and other advanced packages.

Packaging houses are interested in automotive and for good reason. In fact, the average semiconductor content per car has grown from $62 in 1990, to $312 in 2013, and to $350 today, according to figures compiled from TI, IHS and others. By 2022, the figure is projected to reach $460, according to IHS. But even today, the chip content for hybrids is $600, while luxury models are hovering around $1,000, according to McKinsey.

On top of that, Semico Research has recently raised its automotive IC forecast. Originally, Semico predicted that the automotive semiconductor market would reach $41.7 billion in 2017, up 11% over 2016.

The new forecast: “The auto forecast has been raised to $42.5 billion,” according to Jim Feldhan, president of Semico Research.

Panel-level fan-out standards?
Several packaging houses are inching closer to production of panel-level fan-out packaging, a next-generation technology that promises to reduce the cost of today’s fan-out packages.

ASE, Nepes, Samsung and others already have installed the equipment in their panel-level fan-out lines with production slated for 2018 or so.

Panel-level packaging is supposed to reduce the cost of fan-out. The problem? There are no standards in the arena. Several vendors are working on different panel sizes.

Behind the scenes, though, it appears that the market is heading towards two panel standard sizes. One size is being backed by Intel, which is a 510mm x 515mm panel. The other is a more generic 600mm x 600mm panel size. ASE and Samsung are developing the 600mm x 600mm panel size.

Of course, there are two big questions. Will panel-level packaging take off and is there even a need for it?

Is the sky falling?
Broadcom’s move to make an unsolicited bid to acquire Qualcomm for $130 billion is the topic of conversation in the IC industry. Qualcomm recently rejected the bid. But Broadcom will continue to make a push to buy troubled Qualcomm.

When there are signs of more consolidation in the IC industry, foundries and OSATs shutter. For example, fabless chip giant Qualcomm is one of the world’s largest users of foundry services. It also outsources its packaging requirements to the OSATs. Broadcom also does significant business with foundries and OSATs.

When companies merge, the combined entity usually ends up with larger economies of scale and more R&D resources. But they also tend to shed unwanted product divisions and/or product lines.

That impacts business for both the foundries and OSATs. The Broadcom-Qualcomm deal is far from a sure thing. But if it does happen, it will turn the supply chain upside down. It puts the two big outsourcing industries–foundries and OSATs–on edge.

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