New changes in China's packaging and testing field

Since Moore's Law encountered a bottleneck, the development of the packaging and testing field has gradually attracted the attention of the industry. New forces in the packaging industry represented by advanced packaging are changing the landscape of the packaging field.

As a relatively mature link in China's semiconductor industry chain, when the global semiconductor packaging and testing market flapped its butterfly wings, the Chinese packaging and testing field was also shaken.

According to the article "Ten Years of Changes in Packaging and Testing Factories" previously released by Semiconductor Industry Observer , China's semiconductor industry has been developing rapidly in recent years, and some of China's manufacturers are now as large as international manufacturers.

Changdian Technology, Tongfu Microelectronics and Tianshui Huatian are representatives of my country's semiconductor packaging and testing field. With the advent of advanced packaging, wafer foundries have taken the lead in getting involved in advanced packaging technology, which has also had a certain impact on traditional OSAT manufacturers. In this case, traditional semiconductor packaging and testing manufacturers have also begun to have new plans.

At the previous 2021 World Semiconductor Conference, Changdian released its development roadmap. The company said that Changdian will shift gears and speed up in the heterogeneous technology track, and mass-produce some advanced packaging technologies suitable for the market. According to their plan, between 2022 and 2024, Changdian will launch more advanced packaging technologies such as 2.5D and 3D.

It is understood that in order to meet the market demand for chiplet heterogeneous integration applications, Changdian will also launch the XDFOI series of solutions to enable applications in mobile and automotive, communications, computing and medical fields.

In addition, Changdian Technology also issued an announcement this year stating that the implementing entity of the company's "annual production of 10 billion high-density hybrid integrated circuits and module packaging for communications project" is its wholly-owned subsidiary Changdian Technology (Suqian) Co., Ltd. (referred to as "Changdian Suqian"). The company plans to increase its capital in Changdian Suqian by RMB 840 million to implement the fundraising project.

Changdian is not the only company that has made arrangements for advanced technologies. According to the response of Tongfu Microelectronics on the investor interaction platform on June 18, the company insists on integrated circuit packaging and testing as its main business and has already made arrangements for related 3D packaging and testing technologies.

As we all know, after acquiring 85% of the equity of AMD Suzhou and AMD Penang in 2016, Tongfu Microelectronics realized the development model of "joint venture + cooperation" with AMD and entered the AMD supply chain. As a leader in heterogeneous technology, AMD's demand for related packaging and testing may also become one of the foundations for Tongfu Microelectronics to develop advanced packaging.

In May this year, Huatian Technology issued a private placement announcement, which showed that the company plans to raise no more than 5.1 billion yuan to be used for projects such as expanding the scale of integrated circuit multi-chip packaging and expanding high-density system-level integrated circuit packaging and testing.

According to the content of its announcement, Huatian Technology has independently developed multi-chip packaging (MCP) technology, multi-chip stacking (3D) packaging technology, thin high-density integrated circuit technology, integrated circuit packaging anti-detachment layer technology, 16nm wafer-level bump technology, C2W and TSV-based surface acoustic wave filter packaging technology, etc., which have reached international advanced or domestic leading levels, and has achieved the mass production and introduction of a series of packaging and testing products such as various processors, memory, RF baseband, fingerprint recognition, etc., and has formed a certain production capacity as well as technical and scale competitive advantages. Through the construction of this fundraising project, the company's advanced packaging and testing level and production scale will be further improved, production efficiency and product quality will be improved, the company's profitability will be enhanced, and the rapid development of the enterprise will be promoted.

In addition to the leading packaging and testing companies, there are also many companies in China that are committed to the development of the semiconductor packaging and testing industry.

Overall, according to statistics from the China Semiconductor Industry Association, in 2019, the number of packaging and testing companies in mainland China exceeded 120, and the market size of my country's packaging and testing industry also increased from 103.4 billion yuan in 2012 to 219.6 billion yuan in 2018, with a compound growth rate of 13.38%.

In this context, in addition to the well-known semiconductor packaging and testing giants, the changes taking place in some domestic companies dedicated to the packaging and testing field are also worthy of attention.

According to the list of the top ten semiconductor packaging and testing companies in China in 2020 released by CSIA, we see companies such as Nantong Huada Microelectronics and Quanxun RF Technology.

(Source: CSIA)

As one of the shareholders of Tongfu Microelectronics, Huada Microelectronics has a number of advanced packaging and testing production lines composed of equipment introduced from Europe, America, Japan and South Korea, with an annual packaging and testing capacity of 2.5 billion pieces. Its main products include TO-92, TO-92S, TO-94, TO-126, TO-126B, TO-220, TO-220 2L, TO-220 5L, TO-220F, TO-220C, TO-220MF, TO-220HF, TO-263, TO-247, TO-3PN, TO-251, TO-252, TS-2, TC-2, SOT-23-3, SOT-23-5, SOT-23-6, etc., and it can develop new packaging forms for customers.

Quanxun RF Technology became a member of Qualcomm after Qualcomm acquired all the shares of RF360 Holdings Singapore Pte. Ltd. in 2019. It is an important production base of Qualcomm in the field of RF front-end business. Its process and technology positioning is mainly packaging and testing. In May this year, the Qualcomm-Quanxun RF Phase II project started in Wuxi High-tech Zone (Xinwu District). The project is scheduled to be completed and put into use by the end of 2022, and trial production will be carried out in early 2023 and production will be gradually expanded.

Haitai Semiconductor was jointly invested and built by Taiji Industry and SK Hynix in 2009. Its main business is integrated circuit chip probe testing, semiconductor memory packaging and packaging testing. Haitai Semiconductor's packaging and testing advantage lies in DRAM products. According to relevant media reports, Haitai has achieved a monthly packaging capacity of more than 1.2 billion Gb through product structure optimization, production line technology upgrades and other measures, and its annual production capacity accounts for about 13% of the global DRAM packaging and testing capacity. Last year, Haitai Semiconductor and SK Hynix officially signed a five-year third-phase post-process service contract. In this regard, the company also stated that the signing of the third-phase post-process service contract for Haitai Semiconductor has opened a new journey of cooperation between Taiji Industry and SK Hynix, and also opened a new chapter in the development of Haitai Semiconductor.

SanDisk Semiconductor is a wholly-owned subsidiary of Western Digital Corporation of the United States. It is mainly engaged in the research and development, packaging and testing of advanced flash storage products. It is one of the largest flash storage product packaging and testing factories in the world. The company's products mainly include SD, MicroSD, iNAND flash memory modules, etc.

In the article "Challenges Facing Packaging and Testing Plants" previously published by Semiconductor Industry Watch , Risto Puhakka, president of the well-known research organization VLSI Research, once said that one of the pressures OSATs feel comes from China. There are a large number of packaging plants in China, and their costs are much lower, whether through subsidies or other means. At the same time, he also pointed out that large OSATs are currently distributed throughout Asia, but China represents the biggest growth opportunity.

From the above information, we can see that some domestic packaging and testing manufacturers have the support of leading semiconductor chip companies. With the help of these leading companies, domestic packaging and testing manufacturers have achieved certain results in the sub-sectors. On the other hand, in these sub-sectors, we can see that traditional packaging technology still has room for development for domestic packaging and testing manufacturers.

The development of semiconductor packaging and testing is closely related to the development of the entire semiconductor industry. Especially for the current semiconductor industry, the increase in start-ups has also brought new development opportunities to the semiconductor packaging and testing field.

As far as the Chinese market is concerned, China's chip demand will exceed US$400 billion around 2020, and it will import US$380 billion worth of chips. By 2030, it will exceed US$500 billion, and the localization rate will also be increased from the current 15% to 70%. The Sino-US technology trade game, the hot capital market, and the dividends of China's policies have spawned a large number of small and medium-sized chip companies. From 2014 to 2020, the number of domestic chip companies has increased from 681 to 2,218.

As we all know, compared with leading chip manufacturers, small and medium-sized chip companies find it difficult to obtain supporting services from large suppliers. Especially in the context of global production capacity shortage in the past two years, the situation for start-ups has become even more difficult.

As a result, semiconductor supply chain services came into being, including supply chain services in the packaging and testing field.

The only way to defeat all martial arts is to be fast. Especially for start-ups, the faster the sample verification, the more likely it is to ensure that their products can be put on the market quickly. In order to help start-ups smoothly transition to the mass production stage, Moore Elite launched a chip rapid packaging service, which can achieve rapid packaging and proofing within a delivery period of 5 to 7 days. It is understood that Moore Elite's Hefei Rapid Packaging Engineering Center was put into production two years ago, focusing on QFN/BGA/LGA/SiP series products. It is currently in full production, serving more than 500 customers and delivering nearly 3,000 chips.

On the basis of this business, Moore Elite Chongqing Advanced Packaging Innovation Center was also put into production at the end of June this year, focusing on "fast packaging design, mass production packaging, SiP design", mainly providing QFP/SOP/ceramic/metal packaging engineering and small-scale production services. According to the plan, Moore Elite will also start the operation of Wuxi SiP Advanced Packaging Base, providing an annual production capacity of nearly 100 million SiP packaging.

Moore Elite hopes to build its own factories and production capacity to keep the early small-scale production of fast-sealing engineering batches and 20% of the annual shipments of one million products in its own packaging base, and quickly respond to customer needs; outsource large-scale mass production after sufficient product quality and yield verification to large-scale packaging factories, seamlessly connect with large-scale mass production, and relieve chip companies from worrying about the packaging link, thereby accelerating the development of chip design companies.

From the perspective of this business model that seamlessly connects engineering batches to mass production and provides flexible production capacity, it also shows that the development of China's chip design companies has also promoted the growth of a new model in the packaging and testing field.

What is reflected in many domestic semiconductor packaging and testing companies is that the domestic semiconductor industry has ushered in prosperity. As a link in the semiconductor industry chain, domestic packaging and testing manufacturers not only have to face greater market demand, but also have to step up technology upgrades to meet the pursuit of domestic chip design manufacturers. This has put forward new requirements for domestic semiconductor packaging and testing companies.

On the other hand, in the face of the value transformation in the field of packaging and testing, some companies are cross-borderly involved in the semiconductor packaging and testing business, which is another form of challenge for domestic packaging and testing manufacturers. Under such circumstances, how can traditional domestic packaging and testing companies consolidate their position in the market is also a question that needs to be considered.