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| Viewpoint | ||
January 15, 2020
VIEWPOINT 2020: Stephen Rothrock, President & CEO, ATREG, Inc.
Until now, Asia has been the undisputed cradle for semiconductor back-end manufacturing fabs. More than 80% of OSAT facilities are currently located in the region, 50% of which in either China or Taiwan with the rest in a handful of countries including Thailand, Japan, Vietnam, Indonesia, or Malaysia. Annual revenue among the top 25 OSATs amounted to $27.9 billion in 2018 and 65% of the A&T market is controlled by three Asia-based companies – Amkor, ASE, and JCET. The top eight OSATs (33%) account for $21.2 billion or 76% of revenue. Companies outside of the top 8 risk being an acquisition target if they cannot grow revenues beyond current levels. But this picture could look very different in 2020. Chinese fabs are not producing significant wafers as the country is struggling to complete all of its fab builds (eight to 10 facilities out of 30 are not yet built). Advanced technology companies with back-end facilities in China are getting increasingly concerned because of the ongoing trade war between Beijing and Washington involving the introduction of 25 percent tariffs on phones, laptops, and tablets, IP protection, higher local labor costs, and the risk of overly centralizing production in just one location. Each country is coming to the realization that they should keep their fabs closer to home. Here are a few concrete examples: • Texas Instruments spending $2.5 billion to expand its existing 300mm fab in Richardson, TX • Infineon investing €1.6 billion in a new 300mm wafer factory in Graz, Austria • Bosch deciding to keep their investments in Dresden, Germany to build a brand-new 300mm fab • STMicro announcing an expansion of existing sites in Europe • Apple and Google moving some hardware production out of China Only time will tell how the future of back-end manufacturing is going to unfold. The ATREG team will be keeping a finger on the pulse of those trends throughout 2020 to best inform advanced technology companies in their global back-end fab location choices. Stephen Rothrock, President & CEO ATREG, Inc. http://www.atreg.com |
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