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IC substrate industry suffered a continuous decline in 2012 and 2013, rooted in two aspects: first, the PC shipment declined, and CPU substrate as the main type of IC substrate enjoyed the highest average selling price (ASP); second, to suppress the development of Japanese and Taiwanese IC substrate vendors, Korean companies slashed price, Samsung Electro-Mechanics (SEMCO), in particular, implemented a nearly 30% price cut. This led to the global IC substrate industry market scale down 10.3% to USD7.568 billion in 2013.
But after suffering comes happiness, IC substrate industry is expected to continue to bloom in 2015.
There are several factors for the growth last year:
- First, MediaTek’s 8-core MT6592 adopts FC-CSP packaging. Released in October 2013, the chip saw shipment boost-up in 2014. Entering the age of 28nm, MediaTek will ensure uniform adoption of FC-CSP packaging; Spreadtrum from Mainland China will follow in its footsteps
- Second, LTE 4G networks are under construction, thereof IC substrate is needed by BASESTATION chip
- Third, wearable devices are invading the market, which will stimulate SiP module packaging, also needs IC substrate
- Fourth, the pursuit of ultra-thin mobile phone requires chip with good heat dissipation, FC-CSP packaging boasts obvious advantages in terms of heat dissipation and thickness. Main chip for mobile phone of the future will be the FC-CSP packaging or SiP module packaging, involving power management and memory.
At last, SEMCO will not fall back on price-cutting competition, because it is Taiwan’s TSMC not Samsung Electronics that on track to produce Apple’s next-generation processor A8. Even slashing price, it is impossible for TSMC to turn over the order.
The global IC substrate industry market scale is expected to grow at a rate of 11.6% in 2015.
IC substrate industry falls into three camps i.e. Japan, Korea and Taiwan. Japanese companies as the IC substrate pioneer have the strongest technical strength, mastering the most profitable CPU substrate.
Korean and Taiwanese companies rely on the industrial chain cooperation, the former hold about 70% of the world's memory capacity, the Apple’s processor foundry provider Samsung also can produce part of mobile phone chips.
Taiwanese companies are more powerful in the industrial chain by possessing 65% of global foundry production capacity and 80% of senior mobile phone chip foundry (by TSMC or UMC), whose margin is much higher than that of traditional electronic products, (gross margin) exceeding 50%. MediaTek’s MT6592, for instance, the foundry is charged by TSMC or UMC, the packaging is completed by ASE and SPIL, the substrate is offered by Kinsus and testing by KYEC; sharing the same factory, these vendors are pretty high-efficient.
The utterly disadvantaged Mainland Chinese companies in the industrial chain lack support from foundries and packaging companies, lagging behind Taiwanese counterparts several even a dozen years. Even Hisilicon and Spreadtrum have impressive shipments, Taiwanese companies still hold the discourse right of the supply chain.