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The European Institute for the PCB Community (EIPC) continues to provide an efficient platform for following and pursuing new developments. Its Technical Snapshot webinar has become established as a must-attend monthly event, and consistently delivers essential information of the highest calibre and relevance. The 16th in the series on March 23 focused on market requirements and technology trends at the high end of the PCB and semiconductor packaging industries, with two eminent speakers.
EIPC president Alun Morgan was delighted to welcome a dear friend, Dr. Hayao Nakahara, an honorary fellow of the Institute who occupies a unique position of knowledge and insight into the global electronics industry.
Nakahara spoke briefly on the food chain of electronic production, from end products to semiconductors, before commenting on the PCB area.
From Smartphones to Electric Vehicles
He began by looking at smartphones, comparing the year-on-year figures for the top-five smartphone vendors. The average volumes shipped showed a decline from Q4 2020 to the corresponding period in 2021, although the global smartphone market grew in 2021 back to its pre-COVID level. Going forward, only very small year-on year growth was forecast for the next three years.
Nakahara observed that for many PCB manufacturers making HDI boards for smartphones is no longer commercially attractive. Several South Korean manufacturers have ceased production while others have reduced capacity although certain major Taiwanese HDI manufacturers continue to expand their facilities; likewise, some Chinese companies as HDI applications have increased in consumer electronics. But for many, HDI is becoming a “me too” product, and billions of dollars are now being invested in manufacturing IC package substrates.
Although worldwide personal computer shipments decreased 5% year-on-year in Q4 2021, probably due to component shortages, total shipments for 2021 were up by almost 10% year-on-year as a result of remote working and teaching.
Worldwide tablet shipments declined by almost 12% year-on-year in Q4 2021, although there was modest growth for the full year. Wearables shipments grew by about 10%.
Nakahara turned his attention to automotive electronics, particularly developments in electric vehicles (EVs). Although total automotive shipments have been stagnant, sales of electric vehicles are gaining momentum. Worldwide EV sales in 2021 were 6.5 million units, of which the majority were battery-electric, and more than 10 million were forecast for 2022 with enormous growth in China. In Europe, electric vehicles represented 19% of all cars sold in 2021. In Germany, the figure was 26%, and in Norway 86%. He reckoned that in addition to the top-10 brands, 200 manufacturers are developing electric vehicles, and it will be interesting to see how many will survive. Tesla has established a business model that the rest of the industry is endeavouring to emulate.
Although the future for electric vehicles looks bright, Nakahara cautioned that “the rosy picture of EV may encounter strong head wind.” The price of lithium carbonate increased tenfold during 2021. More recently, the nickel shortage shot up the price by a factor of four as a consequence of the Russian invasion of Ukraine as Russia is a major supplier of nickel, a component of high-end batteries. China has subsidised the purchase of electric vehicles, but the subsidy is being removed at the end of 2022. In Germany, however, there are still substantial government subsidies.
Despite these negative factors, sales of electric vehicles in China continue to grow and might reach five to six million units in 2022. Nakahara commented that when he had visited Shenzen it was clear that virtually all the vehicles, particularly the buses and taxis, were electric. He suggested a contributing factor could be that China lags behind the western world in the development of highly efficient internal combustion engines.
He mentioned that an alternative to battery-electric vehicles are hydrogen fuel cell electric vehicles, producing their electricity by chemical reaction. Toyota, in particular has made substantial investment in developing the technology. Refuelling with hydrogen is much quicker than re-charging batteries.
Whatever the power source and whatever the subsidy, sales of electric vehicles will continue to grow in the long term. What affect will that have on the PCB business? Nakahara forecast that the value of automotive PCBs will double from the 2020 figure to exceed 16 billion USD by 2025.
Electric vehicles (EVs) will use two to three times more PCBs than the equivalent internal combustion engine (ICE) vehicles although many applications will obviously be common to both.
EVs will require power circuits for chargers, DC-DC converters, DC-AC inverters, and high voltage battery management systems. Common to ICE and EV will be infotainment systems, communication systems, and a whole range of sensors. Other functions common to both categories will be those associated with advanced driver assistance systems which would eventually be combined to make self-driving realisable, although Nakahara believes that it will be a long time before “perfect autonomous level 5” driving can be achieved.
By 2030, electronics are expected to represent 50% of the value of a car, of which 20% will be in semiconductor chips. Nakahara commented that the U.S. ban on semiconductor sales to China, together with the chip shortage, has prompted billions of dollars of investment in new semiconductor plants and foundries. He showed examples of facilities under construction in the U.S. and South Korea.
It is forecast that the semiconductor market will reach one trillion USD by 2025. Consequently, the hottest ongoing market for PCBs is in packaging substrates, the value of which Nakahara forecast will exceed $25 billion by 2025. Global investment in manufacturing capability and capacity for these packaging substrates will be $25 billion between 2019 and 2025.
Revival of the Packaging Industry
Nakahara’s presentation nicely set the scene for Emilie Jolivet, director of the Semiconductor and Software Division at Yole Développement in France, to report on the revival of the packaging industry and to explore what will come next. Her objectives were to give an update on the dynamics and the latest changes in the packaging industry and to examine what made it more attractive than ever.
Her projections for the revenue of the advanced packaging market combined figures for system-in-package, flip-chip chip-scale package, flip-chip ball grid array, 2.5D/3D package, wafer-level chip-scale package and fan-out. Revenue was expected to grow at almost 9 % CAGR, from $31 billion in 2020 to $51 billion by 2026, driven by megatrends in 5G, automotive infotainment, ADAS, AI, data center and wearable applications.
There has been massive investment in IC fabs across the world, with construction starting on a total of 29 by 2022, including eight in China, eight in Taiwan, two in Korea, two in Japan, three in Europe, and six in the United States. These 29 fabs could produce as many as 1.15 million 300 mm-equivalent wafers per month. She listed the 2021 capital expenditure figures for seven advanced packaging manufacturers, Intel being the highest at $3.5 billion, followed by Taiwan Semiconductor Manufacturing Company (TSMC) at $2.8 billion. Total investment amounts to $11.6 billion.
2020 and 2021 were record years for packaging revenues, with a year-on-year growth of 20% from 2020 over 2019. The overall trend for 2021 was expected to be around +20% with the major players achieving +45% and a big push from Chinese outsourced semiconductor assembly and test vendors (OSATs), concentrated around the Yangtze River Delta.
Jolivet outlined Intel’s IDM 2.0 (integrated device manufacturing) advanced packaging strategy, and its plan to invest more than $20 billion in the construction of two new chip factories in the United States, and possibly one in Germany, in a bid to become a key provider of foundry capacity in the U.S. and Europe. She also gave details of TSMC’s proposal to build a $7 billion chip plant in Japan to supply key components to Japan's electronic device makers and automotive companies, as trade friction between the United States and China threaten to disrupt supply chains. Additionally, there have been recent proposals to build chip packaging facilities in Malaysia, Italy, India, and Vietnam.
What is driving the market for substrates? Jolivet gave examples of recent investments by substrate suppliers Kinsus, AT&S, Daeduck, Nanya, Unimicron, Ibiden, Zhen Ding, and LG Innotek, which amounted to over $5 billion, primarily to increase capacity for flip-chip ball grid array substrates, mostly dedicated to those based onAjinomoto build-up film (ABF). She commented that substrate pricing has increased considerably and for some components is similar to the silicon price.
There is an increasing need for heterogeneous integration in system-in-package or multi-chip packages combining graphics processor units (GPUs) and central processor units (CPUs) with high bandwidth memory (HBM) which needs efficient interconnection. The substrate is key to performance, and it has to be larger than the silicon interposer, generally with a high layer-count. She showed a diagram of an assembly of an HBM stack and a CPU/GPU on an interposer and its packaging substrate.
She demonstrated that a key driver for system-in-package vs. stand-alone packages is area reduction. Her example from an Apple watch showed a package area reduction of 37%. Additionally, the system-in-package has a thinner form factor than individually packaged components, with reduced system board space, improved power management, together with increased performance and functional integration in a smaller area. System-in-package gives design flexibility, a simpler cost-effective SMT assembly process with fewer passes, and allows better electromagnetic interference (EMI) isolation.
Her overview of the memory packaging market indicates that DRAM will remain the leading memory technology with 70% of the overall market, and NAND about 25%. Flip-chip packaging will continue to penetrate the server and PC DRAM markets at the expense of wire-bond. Wafer-level chip-scale packaging is expected to grow in revenue but in terms of value will remain at only 1% of the market by 2026. Through-silicon-via stacking for DRAM and hybrid bonding will enable new progress in memory and are forecast to represent 17% of memory packaging revenue by 2026.
The key takeaways from Jolivet’s presentation were that relocalisation of the fabs and delocalisation out of Asia will have a huge impact in terms of investment and that the Chinese packaging ecosystem will be strengthened to serve local needs. Potential Intel investment in Italy will bring new back-end fabs to Europe. She estimated that the advanced packaging market could be worth more than $50 billion in 2026 and that substrate prices may remain high while manufacturing investments are ongoing. The substrate market will be driven by flip-chip BGA, system-in-package, heterogeneous integration, and further adoption in DRAM packaging.
Thanking the presenters for sharing a huge amount of information that would take some time to assimilate, Morgan brought the webinar to a close. He gratefully acknowledged the efforts of Kirsten Smit-Westenberg and Tarja Rapala-Virtanen in organising a very successful event. The next Technical Snapshot webinar is scheduled for April 20 and, all being well, there will be a live EIPC Summer Conference in Sweden June 14 and 15.