THE PACKAGING AND TESTING INDUSTRY RESHUFFLE IS ACCELERATING, AND MAINLAND MANUFACTURERS ARE FACING NEW OPPORTUNITIES
Recently, the packaging and testing industry in mainland China has been undergoing a lot of changes.
On February 17, packaging foundry Lingsheng Precision Industry Co., Ltd. issued an announcement that after careful resolution by the board of directors, it decided to sell all the equity, or 100% equity, in Ningbo Liyuan, China, to Zhejiang Yin'anhui Business Management Company. The total value of the transaction reached approximately NT$307.8 million.
Ningbo Liyuan has been in a state of loss since 2020, and the extent of losses is still expanding. In the current situation where the packaging and testing market has not achieved a full recovery, if it cannot find a taker, Lingsheng will need to continue to transfuse blood to Ningbo Liyuan, so Liyuan is put on the trading table.
Among them, Lingsheng Precision Industry Co., Ltd. is a company specializing in semiconductor packaging and testing. It was established in Taipei in 1970 with joint investment from Japan's Mitsubishi Electric and Dasheng Electronics.
Then on March 4, Changdian Technology, the first domestic packaging and testing company, issued an announcement stating that Changdian Management Company planned to acquire Sundish Semiconductor (Shanghai) Co., Ltd. (hereinafter referred to as Sundish) held by the seller in cash. Semiconductor) 80% stake, the acquisition amount is US$624 million. The parent company of Sandisk Semiconductor is Western Digital.
Not only the two mentioned in the article, but also the mergers and acquisitions of packaging and testing factories have occurred frequently in the past few years. Since last year, many companies including PowerCheng, Qorvo, Nanmao, etc. have adjusted their businesses and sold mainland packaging and testing plants.
As for why these packaging and testing factories are like this, we need to take a closer look.
First, in 2017, Silicon Products sold 30% of its Suzhou subsidiary to Ziguang Group. The main business projects of Taiwan Silicon Precision Industry Co., Ltd. are engaged in various integrated circuit packaging and manufacturing, processing, trading and testing and other related businesses. Silicon Products itself is one of the top four professional packaging and testing foundry service providers in the world and is now a member of ASE Investment Holdings.
This transaction should have been one of the undisclosed exchange conditions for ASE's acquisition of Silicon Products to be approved by the mainland at that time, because on the same day the transaction was announced, the Chinese Ministry of Commerce issued an announcement stating that ASE's acquisition of Silicon Products was approved with additional restrictive conditions. In 2020, Silicon Products sold its Xiamen factory, Silicon Products Electronics, to Shenzhen Haiwei Co., Ltd., a wholly-owned subsidiary of mainland memory module manufacturer Shenzhen Memory Technology. The reason behind this is that the factory has not reached economic scale and is still operating at a loss.
In December 2021, ASE announced the sale of four factories and businesses in mainland China to Zhilu Capital, including ASE Semiconductor (Weihai) Co., Ltd., Suzhou ASE Semiconductor Co., Ltd. and Nirong Semiconductor (Shanghai) Co., Ltd., ASE Semiconductor (Kunshan) ) Ltd. After the sale, ASE still has three silicon factories in China: Suzhou, Shanghai Rirong, Shanghai Yuexin and Shanghai ASE Semiconductor. Yuexin is a testing factory and ASE Semiconductor is a substrate design and manufacturing plant.
In June 2023, Licheng Technology successively announced the sale of 70% of the shares of Suzhou Licheng to Longsys and Xi'an Licheng to Micron Xi'an. The transaction funds will be used for Licheng to deploy advanced packaging production capacity in Taiwan. The retained 30% of Suzhou Licheng's equity also leaves room for it to continue to expand the mainland packaging and testing market.
In addition, Licheng disclosed in its board of directors that it will evaluate the possibility and necessity of production in third places besides Taiwan, including Southeast Asia, India and other places.
In December 2023, Qorvo announced the sale of assembly and test facilities in Beijing and Dezhou, Shandong to contract manufacturer Luxshare Precision Industry as one of its measures to reduce capital intensity and optimize the supply chain. After divesting its factory in China, Qorvo only has self-built factories in the United States, Costa Rica and Germany.
On December 21, 2023, Nanmao, a major packaging and testing company in Taiwan, announced that the board of directors approved a 100% reinvestment in subsidiary ChipMOSBVI and sold the entire 45.0242% stake in Shanghai Hongmao Microelectronics to Suzhou Yuanhepu Huazhixin Equity Investment 11 local enterprises including partnerships, with a transaction amount of RMB 979 million.
The changes in many packaging and testing plants are the result of market reshuffle and are also part of the adjustment of the global semiconductor industry structure. After in-depth analysis, the above changes mainly have the following key considerations.
The first point is that many manufacturers consider the impact on the supply chain and transfer orders to other regions for production.
The second point is the rapid development of the packaging and testing industry in mainland China.
The third point is that there are a large number of packaging and testing companies in mainland China and the market competition is fierce.
Opportunities are coming for mainland packaging and testing industry
As Moore's Law slows down, the semiconductor industry is facing changes. As a key link, the role of packaging and testing technology has become increasingly prominent.
The recovery of consumer electronics and the growth of the memory market will boost the packaging and testing industry. The expansion of data centers and the popularity of cloud computing will also bring substantial growth to the domestic memory market. In addition, the technical needs of the post-Moore era place higher demands on packaging and testing technology.
The development of new energy vehicles and green energy industry brings opportunities for the application of wide bandgap semiconductors. Advanced packaging technology is critical to ensure the performance of wide-bandgap devices. At the same time, the miniaturization and high performance of sensors are also the focus of the packaging and testing industry.
So is China capable of taking on this series of challenges?
In the past two years, as the scale of mainland China's packaging and testing market has continued to increase, the technical level of domestic packaging and testing companies in the advanced packaging field has also been rapidly improving.
After years of technological innovation and market accumulation, the products of domestic-funded enterprises have developed from DIP, SoP, SoT, QFP and other products to more technologically advanced products such as QFN/DFN, BGA, CSP, FC, TSV, LGA, WLP, etc., and in WLCSP , FC, BGA and TSV and other technologies have made significant breakthroughs. The output and scale have continued to increase, gradually narrowing the technological gap with foreign manufacturers, which has greatly promoted the development of my country's packaging and testing industry. In the emerging chiplet field, dozens of companies have already participated.
These achievements are inseparable from years of technological innovation and market accumulation by domestic packaging and testing companies.
