Packaging and testing houses cautiously optimistic about 2008

Taiwan-based packaging and testing houses generally remain optimistic about 2008, but a host of factors, including the US sub-prime crisis and decline in semiconductor demand, are prompting them to expect slow growth for the year.

Backend service providers have expressed optimism during recent investors conferences that their operations in the logic, memory and driver IC segments will stay healthy in 2008. With players carefully controlling their pace of expansion, capacity will be tight.

Advanced Semiconductor Engineering (ASE) has revealed that judging from clients' order estimates, sales of the logic IC segment will rise steadily beginning in the second quarter.

Bough Lin, chairman of Siliconware Precision Industries (SPIL), has provided a cautiously optimistic outlook that the emerging markets will continue to drive growth for PC, handset and consumer electronics, while the conservative capital expenditure (capex) budgets of packaging and testing houses are favorable for keeping utilization at high levels.

But 2008 growth will not be as strong as 2007, as the baseline of last year is high, and the rising oil prices and the subprime crisis, will weaken demand, Lin said.

For the memory segment, the DRAM density migration to 1Gb from 512Mb, the increase in the proportion of 70nm output, the 30-40% reduction of DRAM makers' 2008 capex, and the phasing out of 8-inch fabs, will help improve the supply/demand structure of the DRAM industry. The migration of DRAM production to 70nm from 90nm will increase chip count 40% per wafer and extend the time needed for testing.

DK Tsai, chairman of memory packaging and testing house Powertech Technology (PTI), expects sales in the second half of the year will be better than the first half.

For the drive IC segment, Chipbond Technology chairman FJ Wu said backend service for the segment will see tight capacity in 2008, as a result of conservative expansion, which will keep the driver IC packaging and testing sector healthy.

Sources: Companies, compiled by Digitimes, February 2008

Article translated by Rodney Chan