Substrates for Semiconductor Packaging

2012 Market Outlook for Laminate and Leadframe Materials

By Jan Vardaman, TechSearch International, and Dan Tracy, SEMI

Combined, laminate substrates and leadframes will represent an estimated US$ 13.3 billion market in 2011 and is forecasted to reach $14 billion in 2012. This is larger than the revenues for silicon wafers (including silicon-on-insulator wafers) of $10.3 billion in 2011 and $10.7 billion forecast for 2012. As cited in last month’s article on packaging materials, steady unit growth for both laminate substrates and leadframes are expected in 2012.

Laminate substrates, which are either double-sided or multilayer, are used for PBGAs, plastic pin grid arrays (PPGAs), plastic land grid arrays (LGAs), and CSPs. While most of the packages utilize wire bond interconnections, high performance, high I/O count devices increasingly use flip chip. Flip chip PBGAs include ASICs, high-end DSPs found in base stations, CPUs for PCs, graphics processors, chipsets, multimedia devices, and field programmable gate arrays (FPGAs). A growing number of flip chip laminate CSP substrates are found in wireless applications as companies migrate from wire bond to flip chip for new designs.

While some laminate substrate suppliers have added capacity in the past few years, demand has not outgrown the capacity additions and the industry has an ample supply of flip chip substrates. Today the industry is operating at approximately 80 to 85 percent capacity utilization. Some supply constraints were cause by various material shortages including BT-resin, glass fiber cloth, and solder mask after the March 11 disaster in Japan, but the industry has recovered now. Most substrate makers are able to interchange their production lines between wire-bond PBGA and laminate CSP, but many companies refuse to supply wire-bond PBGAs because it is a low margin business. IC package substrate production has transitioned from Japan to Taiwan and will slowly expand into China, especially for wire bond laminate CSP and PBGAs. In total revenues, the laminate substrate market is forecasted to reach $10.3 billion in revenues for 2012.

Evident by the hundreds of billion units shipped each year, leadframes remain a key substrate technology for packaging semiconductors. A long-standing business issue facing the leadframe industry remains the large number of suppliers in the leadframe market. In general, little differentiation exists among leadframes, and, as a result, the basis for competition in the market is lowest price and shortest turn-around time: leadframes are a commodity. Many leadframe suppliers have shifted production to and increase capabilities in China in search of lower costs and to be closer to the growing end-customer base located there.

Nonetheless, innovation continues with leadframes as suppliers and their customers work together to reduce costs, improve reliability, and transition to smaller form factors. Leadframe-CSPs (LF CSP) remain a strong segment in terms of unit growth as does the LED leadframe market—both segments will grow by over 10 percent in 2012. Total leadframe revenues are estimated to remain in the $3.6 to $3.7 billion range for 2012.

Chart: Leadframe Unit Growth (2009-2012F)

Source: SEMI 2012

All of the information in this article was derived from a recently completed market research study, Global Semiconductor Packaging Materials Outlook—2011-2012 Edition, produced by SEMI and TechSearch International. In developing this report, over 140 in-depth interviews were conducted with semiconductor manufacturers, packaging subcontractors and packaging materials suppliers throughout the world.

TO ORDER YOUR COPY of Global Semiconductor Packaging Materials Outlook—2011-2012 Edition, please contact Dr. Dan P. Tracy, research development director, Industry Research and Statistics, SEMI via email at [email protected], or telephone 1.408.943.7987 or facsimile 1.408.943.7915. You can also click here for sample, pricing, and ordering information.