Is packaging business a new global target?

Intel is stepping up its fight with TSMC for more chip manufacturing business.

In a video conference call with reporters on Wednesday, Intel laid out its latest technology pipeline and sales strategy to gain share from market leader Taiwan Semiconductor Manufacturing Co. Mark Gardner, head of Intel's IFS business, said the company's Foundry Services offer a compelling proposition to its customers, citing what Intel calls a geographically more secure supply chain.

Gardner noted that Intel's chip manufacturing plants and chip assembly/test/packaging sites are located around the world, including in the United States. Intel said it hopes to locate more of its new assembly and advanced packaging services in New Mexico. In contrast, most of TSMC's chip manufacturing facilities are in Taiwan, although the company also has some facilities and offices in the United States, Europe and elsewhere in Asia.

"As Intel Foundry Services Group, our first key solution is open systems foundry [letting customers pick and choose services]," he said. "The basis of it is really about secure supply - coming from geographic diversity and a Western R&D [base]." It might be a good idea for big tech companies to move some of their semiconductor operations to factories outside of Asia.

Intel executives are also optimistic about the company's roadmap for future chip packaging technologies, which will allow upcoming chips to improve performance at lower costs. They mentioned how Intel plans to transition to a glass substrate material, which is stiffer than current technology and allows for better chip functionality. Another promising packaging technology, called co-packaged optics, is expected to enter production by the end of next year and provide higher-bandwidth connections to the chip.

Gardner said Intel Foundry Services is willing to let customers use a subset of its services -- even if that means using another foundry for chip manufacturing and using Intel only for testing or assembly.

Intel has a steep hill to climb. According to TrendForce, TSMC’s market share in the third-party chip manufacturing business is about 59%, followed by Samsung at 16%. Intel's share is small as it begins to increase foundry services to external customers.

But it seems Intel should be able to gain some share based on its marketing strategy of providing more manufacturing capabilities and services in Western countries. Intel said it is in discussions with seven of the top 10 chip packaging customers, including Cisco Systems and Amazon as the two main publicly announced customers.

The semiconductor back-end process market is expanding due to growing demand for future vehicles such as electric vehicles and autonomous vehicles, but some experts say South Korea needs to improve its competitiveness in the back-end process market.

According to data from market research company Zion Market Research on May 16, the semiconductor back-end process market is expected to grow at a compound annual growth rate of 4.8% from 2022 to 2028, reaching US$50.9 billion (approximately 681,000 US dollars) by 2028. billion won).

The semiconductor manufacturing process is divided into front-end and back-end processes. Designing a semiconductor chip and engraving it on a wafer are front-end processes, while in the back-end process, chip manufacturers cut and wrap the chips with insulating materials to protect them from external impacts and wire them for stable power supply. Packaging that connects different types of semiconductors to create system semiconductors is also part of the back-end process.

Zion Market Research analyzes that with the rise of electric vehicles and autonomous vehicles, back-end processes are becoming increasingly important. It said packaging to improve the performance of semiconductors in these vehicles and testing them to verify their safety has become even more important.

The semiconductor back-end process industry is dominated by Taiwanese and mainland companies. Taiwan's ASE is the No. 1 semiconductor back-end processing company by revenue in 2021, followed by the U.S.'s Amkor and China's JCET, according to market research firm Yole Development. No Korean company made the top 10 list.

Although Samsung Electronics and SK Hynix are world leaders in the field of memory semiconductors, the overall Korean semiconductor ecosystem is not strong. Therefore, Samsung Electronics and SK Hynix have been strengthening their packaging business capabilities.

Since the beginning of this year, Samsung Electronics has been investing in its Cheonan packaging production line to increase its production capacity in South Korea. Samsung's DS division launched an advanced packaging team through restructuring.

Samsung currently has two-dimensional (2.5D) packaging technology that places logic semiconductors and high-bandwidth memory (HBM) on a flat panel, and 3D (x-cube) packaging technology that places static RAM or SRAM on it. (EUV) process fabricated logic integrated circuits.

SK Hynix is ​​also considering building a $15 billion packaging manufacturing plant in the United States. Construction of the line is expected to accelerate once subsidy negotiations with the U.S. government are finalized.