| Asia emerges as a Hot
Outsourcing Destination for
Power Semiconductor Packaging Source: Channel NewsAsia - Thursday, March 20, 2008 |
 PALO ALTO, Calif. — The trend to outsource packaging requirements
to Asia grows among power semiconductor manufacturers due to
declining profit margins and escalating competition. Their new business
models speed consumer adoption of their products by reducing time
to market and production costs.New analysis from Frost & Sullivan (http://www.semiconductors.frost.com), Outsourced Power Semiconductor Packaging Markets, finds that the markets earned revenues of $887.6 million in 2007 and estimates this to reach $1.4 billion by 2011. Outsourcing packaging to Asia will help power semiconductor companies lower their manufacturing costs. Asia's economical raw materials, labor, installation and maintenance costs will help it generate more revenues from packaging than any other region. One factor in the growth of outsourcing to Asia is the shift towards integrated circuit (IC) lead free packages that boost demand for power quad flat no-leads (QFN) packages primarily manufactured in Asia. Directives such as Restriction of Hazardous Substances (RoHS), Waste Electrical, and Electronic Equipment (WEEE) put a ceiling on the use of lead in electrical and electronic products. To comply with the regulations, power semiconductor manufacturers have been turning to power with lead-free QFN packages. "Since power QFN is a new packaging technique, most power semiconductor manufacturers do not possess the requisite in-house manufacturing capabilities," says Frost & Sullivan Senior Research Analyst Bonnie Varghese K. "Therefore, there is extensive outsourcing of QFN packaging to Asia." Meanwhile, IC packaging companies in the power semiconductor market must stay abreast of developments in the semiconductor industry to meet the constant demand for improved packages. They will introduce differentiated packaging by identifying the right technology and integrating it immediately. "Market participants will be particularly responsive to customer preference for increased functionality in mobile phones, since it triggers the need for higher levels of integration," notes Varghese. "This could be a huge challenge for power semiconductor packaging companies, since several power semiconductor devices are used in portable products." To cater to the requirement for high efficiency, power semiconductor manufacturers demand packages that offer high performance. IC packaging companies will also have to take stock of the form factor, since constantly reduced die sizes provide small form factors, such as what was previously packed in a D2PAK is now being packed in a DPAK. End-user demand for greater integration, higher performance, smaller form factors, and shorter product life cycle has forced IC packaging companies to improve the production process and change their assembly lines, by increasingly relying on outsourcing. |