A strategic tie-up with Hon Hai could help SPIL land some Apple business.

While ASE and SPIL are still ahead of their Chinese competitor, with 34% and 21% market share respectively, China's aggressive push is worrying.

The move leaves some to wonder if the silicon foundry giant is gradually moving into the IC-packaging world, thereby competing against Amkor, ASE and other subcontractors. Rick Cassidy, president of TSMC North America, said TSMC remains focused on the foundry market. But "lines are blurring" between some parts of the wafer manufacturing and packaging processes, Cassidy said.

"We have put on hold the purchase of copper wire bonders," said Byron Chiang, spokesperson for Siliconware Precision Industries (SPIL), on the phone. "Orders are not coming along as strong as we originally thought."

The Top-10 advanced packaging companies garnering market share on Gartner's just-released preliminary list for 2008 include Advanced Semiconductor Engineering (ASE, Kaohsiung, Taiwan), Amkor Technology (Chandler, Ariz.), Siliconware Precision Industries (SPIL, Taichung, Taiwan), STATS ChipPAC (Singapore), Powertech Technology (Taipei, Taiwan), UTAC (Singapore), ChipMOS Technologies (Hsinchu, Taiwan); King Yuan Electronics (Hsinchu, Taiwan); Carsem (Ipoh, Malaysia); and Unisem (Ipoh, Malaysia).

Citing the IC downturn, Gartner has cut its forecast for the semiconductor assembly and test services (SATS) market. In the current forecast, the SATS market is expected to grow 1.6 percent in 2008, but the sector will fall 4 percent in 2009.