Assembly and Test Services Keep Outpacing the Semiconductor Market

IDMs and OEMs focusing on design and distribution, less on manufacturing

by Adrian Offerman

March 12, 2008 - The worldwide market for semiconductor assembly and test services (SATS) grew for the sixth consecutive year in 2007, according to Gartner. Revenue was up 7.4 percent at $20.6 billion. For the sixth year in succession, the SATS market continued to outpace the overall semiconductor market by more than 50 percent (overall semiconductor revenue grew 2.9 percent in 2007).

According to Gartner, a growing percentage of the total industry revenue is now attributed to packaging, assembly and testing. The outsourcing portion of this back-end manufacturing process has grown steadily since the recession of 2001. Integrated Device Manufacturers (IDMs) and OEMs continue to expand their adoption of the outsourcing business model, said Jim Walker, research vice president for Gartner. Their resources are now more focused on design and distribution and less on manufacturing. The result is increased demand for outsourcing. This demand, combined with the increasing transition to advanced packaging technologies, propels the SATS industry.

Top Five Vendors

The top five vendors maintained their rankings in 2007, but their total revenue grew by 4.4 percent compared with 10.4 percent growth by the rest of the industry. Advanced Semiconductor Engineering, of Taiwan, remained the leading provider of assembly and test services with revenue exceeding $3 billion. Amkor Technology, of Arizona, stayed at number two. Siliconware Precision Industries (SPIL), of Taiwan, was the number three vendor, as it increased its lead over Singapore's STATS ChipPAC. The highest growth among the top five was achieved by UTAC, of Singapore, with 18.5 percent growth taking its revenue to over $750 million. This was due to growth in testing, memory and leadless-lead-frame packaging.

2007 rank	2006 rank	Company	2007 revenue	2007 market share	2006 revenue	2006 market share	2006-2007 growth
1	1	ASE Group	3,080	15.0%	3,026	15.8%	1.8%
2	2	Amkor Technology	2,739	13.3%	2,728	14.2%	0.4%
3	3	SPIL	1,967	9.5%	1,728	9.0%	13.8%
4	4	STATS ChipPAC	1,631	7.9%	1,617	8.4%	0.9%
5	5	UTAC	756	3.7%	638	3.3%	18.5%
		Others	10,427	50.6%	9,444	49.2%	10.4%
		Total market	20,600	100.0%	19,181	100.0%	7.4%

For 2008, Gartner forecasts another year of growth for the SATS industry with initial estimates for 9.8 percent over 2007.