Source: Semiconductor Industry Observation (ID: icbank)
A few days ago, Sun and Moonlight, the leading packaging and testing company, held a groundbreaking ceremony for the new K25 factory in Kaohsiung, Taiwan, China. Zhang Qiansheng, the chairman who rarely appears, came here in person. He said that in the face of the threat of the red supply chain, mainland China did catch up quickly, but it will take some time to catch up with the scale of Sun and Moonlight. Moreover, Sun and Moonlight and silicon products make profits of up to 90% of the overall packaging and testing industry. The two companies have more funds and talents to achieve a higher market share, so they will maintain their competitive advantages in the industry.
Zhang Qiansheng's confidence makes sense. From 2014 to 2016, Taiwan accounted for more than half of the global integrated circuit packaging and testing foundry market, ranking first.
Statistics from Guangzheng Hang Seng show that currently, in the global closed-beta market, Taiwan accounts for 54%, the United States 17%, mainland China 12%, Japan 6%, South Korea 5%, and Singapore 4%.
can be seen that it is not a matter of overnight success for the mainland to catch up with Taiwan. The gap between
is narrowing, but there is still
After recent years of development, my country's packaging and testing industry level has improved well. But overall, we still have internationally leading packaging and testing companies, including profitability, technology, ecological environment, market influence, talents, etc.
, especially in terms of profitability, take Riyueguang, Changdian Technology and Tianshui Huatian as examples:
Changdian Technology and Tianshui Huatian have achieved rapid growth through mergers and acquisitions and technology replacement in the past two years. But the profit margin has been low. Tianshui Huatian's revenue in 2017 was RMB 7 billion, an increase of 28% year-on-year, with a net profit of RMB 495 million, a gross profit margin of 17.90%, and a net profit margin of 7.80%. The financial report just released by Changdian Technology shows that the operating income in 2017 was 23.9 billion yuan, a year-on-year increase of 24.54%; the net profit attributable to shareholders of listed companies was 343 million yuan.
In contrast, Sun and Moonlight had a revenue of more than US$5 billion (approximately RMB 32 billion) in 2017, with a gross profit margin of 26.6%.
can be seen, and the gap is very obvious in terms of overall revenue or gross profit margin.
statistics from the Tuoqi Industry Research Institute show that among the top 10 professional integrated circuit packaging and testing manufacturers in the world in 2017, 5 are from Taiwan, 3 are from mainland China, 1 in the United States, and 1 in Singapore. This basically represents the strength of the professional OEM packaging and testing industry in various regions.
Figure 2017 The top ten IC packaging and testing foundry manufacturers in the world (unit: million US dollars), source: Tuoqi Industry Research Institute
In addition, there are still gaps in technology, talents, management, etc. in domestic packaging and testing enterprises. We lack top talents and leading talents, coupled with the monopoly of foreign intellectual property rights, and the lack of intelligence, informatization and internationalization knowledge levels, the international management level of domestic packaging and testing enterprises still needs to be improved.
international major manufacturers continue to consolidate their dominant position
The leading international packaging and testing companies represented by Sun and Moonlight and Antuo have already possessed technological and scale advantages through years of operation and accumulation.
Take Sun and Moonlight as an example. In the high PC growth period of the 1990s, the company entered the IC packaging and testing industry and developed related materials and electronic manufacturing services (EMS); expanded product coverage through mergers and acquisitions, and established joint ventures with customers and supply chains to optimize vertical integration efficiency.
In terms of R&D, Sun and Moonlight masters top packaging and microelectronics manufacturing technology and is the first to mass-produce TSV/2.5D/3D related products; in 2017, the R&D expenses were NT$11.3 billion, accounting for 4.1% of revenue (the average level of fourth to fifth places in the industry is 3.6%). Form a positive cycle of orders and investments in the field of advanced packaging. According to Yole's estimate, advanced packaging will account for 44% of the overall industry in 2020, about US$31.5 billion, and Sun Moonlight's advantageous business will have greater space.
Based on the existing advantages, these international manufacturers are still further consolidating their leading advantages through mergers and acquisitions.
For example, in 2017, the industry's No. 1 Sun and Moonlight acquired the fourth-ranked Silicon equity.
Auto acquired J-Device and Nanium in 2016 and 2017. J-Device ranks sixth in the world, and Nanium is a leading European professional OEM packaging and testing company.
Source: Semiconductor Industry Observation (ID: icbank)
A few days ago, Sun and Moonlight, the leading packaging and testing company, held a groundbreaking ceremony for the new K25 factory in Kaohsiung, Taiwan, China. Zhang Qiansheng, the chairman who rarely appears, came here in person. He said that in the face of the threat of the red supply chain, mainland China did catch up quickly, but it will take some time to catch up with the scale of Sun and Moonlight. Moreover, Sun and Moonlight and silicon products make profits of up to 90% of the overall packaging and testing industry. The two companies have more funds and talents to achieve a higher market share, so they will maintain their competitive advantages in the industry.
Zhang Qiansheng's confidence makes sense. From 2014 to 2016, Taiwan accounted for more than half of the global integrated circuit packaging and testing foundry market, ranking first.
Statistics from Guangzheng Hang Seng show that currently, in the global closed-beta market, Taiwan accounts for 54%, the United States 17%, mainland China 12%, Japan 6%, South Korea 5%, and Singapore 4%.
can be seen that it is not a matter of overnight success for the mainland to catch up with Taiwan. The gap between
is narrowing, but there is still
After recent years of development, my country's packaging and testing industry level has improved well. But overall, we still have internationally leading packaging and testing companies, including profitability, technology, ecological environment, market influence, talents, etc.
, especially in terms of profitability, take Riyueguang, Changdian Technology and Tianshui Huatian as examples:
Changdian Technology and Tianshui Huatian have achieved rapid growth through mergers and acquisitions and technology replacement in the past two years. But the profit margin has been low. Tianshui Huatian's revenue in 2017 was RMB 7 billion, an increase of 28% year-on-year, with a net profit of RMB 495 million, a gross profit margin of 17.90%, and a net profit margin of 7.80%. The financial report just released by Changdian Technology shows that the operating income in 2017 was 23.9 billion yuan, a year-on-year increase of 24.54%; the net profit attributable to shareholders of listed companies was 343 million yuan.
In contrast, Sun and Moonlight had a revenue of more than US$5 billion (approximately RMB 32 billion) in 2017, with a gross profit margin of 26.6%.
can be seen, and the gap is very obvious in terms of overall revenue or gross profit margin.
statistics from the Tuoqi Industry Research Institute show that among the top 10 professional integrated circuit packaging and testing manufacturers in the world in 2017, 5 are from Taiwan, 3 are from mainland China, 1 in the United States, and 1 in Singapore. This basically represents the strength of the professional OEM packaging and testing industry in various regions.
Figure 2017 The top ten IC packaging and testing foundry manufacturers in the world (unit: million US dollars), source: Tuoqi Industry Research Institute
In addition, there are still gaps in technology, talents, management, etc. in domestic packaging and testing enterprises. We lack top talents and leading talents, coupled with the monopoly of foreign intellectual property rights, and the lack of intelligence, informatization and internationalization knowledge levels, the international management level of domestic packaging and testing enterprises still needs to be improved.
international major manufacturers continue to consolidate their dominant position
The leading international packaging and testing companies represented by Sun and Moonlight and Antuo have already possessed technological and scale advantages through years of operation and accumulation.
Take Sun and Moonlight as an example. In the high PC growth period of the 1990s, the company entered the IC packaging and testing industry and developed related materials and electronic manufacturing services (EMS); expanded product coverage through mergers and acquisitions, and established joint ventures with customers and supply chains to optimize vertical integration efficiency.
In terms of R&D, Sun and Moonlight masters top packaging and microelectronics manufacturing technology and is the first to mass-produce TSV/2.5D/3D related products; in 2017, the R&D expenses were NT$11.3 billion, accounting for 4.1% of revenue (the average level of fourth to fifth places in the industry is 3.6%). Form a positive cycle of orders and investments in the field of advanced packaging. According to Yole's estimate, advanced packaging will account for 44% of the overall industry in 2020, about US$31.5 billion, and Sun Moonlight's advantageous business will have greater space.
Based on the existing advantages, these international manufacturers are still further consolidating their leading advantages through mergers and acquisitions.
For example, in 2017, the industry's No. 1 Sun and Moonlight acquired the fourth-ranked Silicon equity.
Auto acquired J-Device and Nanium in 2016 and 2017. J-Device ranks sixth in the world, and Nanium is a leading European professional OEM packaging and testing company.
Licheng acquired 39.6% of the shares of Micron's Japanese listed company TeraProbe in 2017, and 100% of the shares of Micron Akita, a packaging and testing plant in Japan.
is catching up with
With the tight supply and demand of memory in 2017, the three packaging and testing plants in China, Jiangsu Changdian, Tianshui Huatian and Tongfu Microelectronics have accumulated strengths and achieved revenue growth rates of 12.5%, 28.3% and 32.0%, respectively, and their revenue amount is far higher than the global average.
Our development speed is indeed very fast, but overall, the overall level and market influence are still weak, and the gap with international leading companies is still large. The lack of technology, talents, and the imperfect ecosystem have limited influence and voice in the global packaging and testing market.
If we want to catch up as soon as possible, mergers and acquisitions seem to have become a "shortcut". While several leading international packaging and testing companies are carrying out mergers and acquisitions, we are also constantly integrating and striving to catch up.
For example, Changdian Technology acquired Xingke Jinpeng in 2014.
Tongfu Microelectronics acquired 85% of the shares of two AMD's subsidiaries in 2015.
Huatian Technology acquired 28.85% of Xiti Microelectronics' equity in 2013, and in 2014, FCI and its subsidiaries. In 2016, Xinquan acquired 75% of Quanzhike's shares. After completing the merger and acquisition, Taiwan's status remained basically unchanged, and the US's market share increased slightly, from 12% to 17%. Through mergers and acquisitions, mainland Chinese companies have absorbed advanced technologies, and at the same time won over many industry talents, filling the gap in the scarcity of local IC talents.
Domestic packaging and testing companies are constantly spending money and taking mergers and acquisitions to accelerate the development of the domestic packaging and testing industry. However, with the importance of foreign countries to the packaging and testing industry, especially the various restrictions on overseas mergers and acquisitions of Chinese capital by developed countries and regions represented by the United States, the trend of overseas mergers and acquisitions of mainland enterprises has slowed down.
M&A is just a measure to quickly catch up with advanced international companies, but to truly become bigger and stronger, you still have to practice your internal skills solidly. While acquiring, our packaging and testing companies are also evolving towards high-end packaging technology, such as increasing efforts to develop advanced packaging technologies such as Fan-Out and SiP, and showing their own technical achievements to the market through customer certification, and continuously improving their competitiveness.
At present, packaging and testing plants continue to develop production capacity in high-end packaging technology (Flip Chip, Bumping, etc.) and advanced packaging (Fan-In, Fan-Out, 2.5D IC, SiP, etc.). The annual revenue of manufacturers including Changdian Technology, Tianshui Huatian, Tongfu Microelectronics maintained double-digit growth in 2017, and performed better than the global IC packaging and testing industry level.
In recent years, mainland Chinese enterprises have continuously deepened their layout of advanced packaging technology, strengthened R&D efforts, and made certain progress. For example, leading companies have already owned global patented micro-integrated system substrate process technology (MIS); have mastered advanced packaging technologies such as FC-CSP, WLP, SiP, etc.; have made significant progress in advanced packaging fields such as FCBGA, MCP, SiP, PoP, TSV and other products, and have achieved mass production and sales, gradually narrowing the technical gap with Sun and Moonlight.
At present, the advanced packaging technology level of the top three mainland companies is basically synchronized with overseas markets, and advanced packaging such as BGA, WLP, and SiP have all achieved mass production.
How to do it in the future
Sun Moonlight Zhang Qiansheng said in a previous interview that Evergrande, the biggest player in the semiconductor industry, is like TSMC, whose market share continues to rise. He also pointed out that mainland China spends a lot of money, but it is not possible to discover outstanding talents in the short term. To this end, after a series of integrations, China's packaging and testing industry needs to work hard to explore its own path of rise. The first thing to face is the talent problem. This is not a day or night, but requires a combination of multiple parties from education to industrial cultivation.
Secondly, you must be aware of the power of buying. Looking at the development history of Taiwan's packaging and testing industry, it is actually a history of mergers and acquisitions, and this is related to the advantages of Evergrande, the packaging industry belongs to the economies of scale industry, and the biggest one is Evergrande's advantage. Since Silicon acquired Huaxu Electronics and obtained the huge operating rights with Jidi Micro, the integration activities of packaging and testing have been continuously established. I know that Taiwan's two major packaging and testing have also recently entered the same area, which has also given the domestic packaging and testing industry some new inspiration.
Furthermore, keeping up with new technology trends is also essential.
In 2016, TSMC's InFO packaging technology replaced FC-CSP for iPhone processors, which means that packaging is integrated into manufacturing. Foundries can enter the packaging and testing field through Fan-Out packaging, seizing the market that originally belonged to packaging and testing manufacturers. In addition, technological changes have led to PCB replacing IC carrier boards, and the fine line manufacturing technology of carrier boards has been introduced into the PCB industry, such as MSAP, SAP, etc. The phenomenon of
shows that the diversification of market demand leads to the diversification of product types, and chips are developing towards miniaturization and integration. To meet market demand, packaging technology will continue to evolve.
In the foreseeable future, packaging technology will show the following development trends:
1, SiP system-level packaging , the Internet of Things will be the main driving force for the future semiconductor growth, and chips with different processes and functions need to be packaged together in 3D and other ways to reduce the volume;
2, FO-WLP fan-out chip-level packaging , FO-WLP has the characteristics of ultra-thin and high I/O pin count, and the product has the advantages of small size, low cost, good heat dissipation, excellent electrical properties, and high reliability. It is one of the third generation of packaging technologies after wire drawing and flip-up;
3, Panel board-level packaging : can greatly reduce packaging costs and improve production efficiency. Changes in
technology will lead to changes in the industrial chain, which will lead to new business models. In such an industry background, actively developing advanced packaging technology and keeping up with changes in the market and business model is a problem that mainland IC packaging and testing companies in my country have to face. At the same time, relevant policies and industrial funds should also play an increasingly important role, which is determined by our system, especially in terms of talent training and capital orientation. If you do well, the sealed and testing industry will truly take off.
text/Semiconductor industry observation Zhang Jian
In 2016, TSMC's InFO packaging technology replaced FC-CSP for iPhone processors, which means that packaging is integrated into manufacturing. Foundries can enter the packaging and testing field through Fan-Out packaging, seizing the market that originally belonged to packaging and testing manufacturers. In addition, technological changes have led to PCB replacing IC carrier boards, and the fine line manufacturing technology of carrier boards has been introduced into the PCB industry, such as MSAP, SAP, etc. The phenomenon of
shows that the diversification of market demand leads to the diversification of product types, and chips are developing towards miniaturization and integration. To meet market demand, packaging technology will continue to evolve.
In the foreseeable future, packaging technology will show the following development trends:
1, SiP system-level packaging , the Internet of Things will be the main driving force for the future semiconductor growth, and chips with different processes and functions need to be packaged together in 3D and other ways to reduce the volume;
2, FO-WLP fan-out chip-level packaging , FO-WLP has the characteristics of ultra-thin and high I/O pin count, and the product has the advantages of small size, low cost, good heat dissipation, excellent electrical properties, and high reliability. It is one of the third generation of packaging technologies after wire drawing and flip-up;
3, Panel board-level packaging : can greatly reduce packaging costs and improve production efficiency. Changes in
technology will lead to changes in the industrial chain, which will lead to new business models. In such an industry background, actively developing advanced packaging technology and keeping up with changes in the market and business model is a problem that mainland IC packaging and testing companies in my country have to face. At the same time, relevant policies and industrial funds should also play an increasingly important role, which is determined by our system, especially in terms of talent training and capital orientation. If you do well, the sealed and testing industry will truly take off.
text/Semiconductor industry observation Zhang Jian
