In 2012, global semiconductor sales fell 2.7%; semiconductor equipment spending dropped by 15% to US$36.9 billion from US$43.5 billion in 2011. The semiconductor market in 2013 is also not optimistic, accompanied by recession of the world’s emerging economies and Europe’s sluggish recovery. U.S. and Japanese markets are relatively better, while China, as the world’s largest semiconductor market, has witnessed lower-than-expected economic growth, the global economy is yet to show signs of recovery.
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In spite of the overall decline in semiconductor industry, the foundry field still grows. In 2012, the global semiconductor foundry market reached total value of US$34.6 billion, an increase of 6.5% over 2011. With the growth slowdown of smart phones and tablet PCs, it is expected that the foundry market in 2013 will increase by just 1.6% to exceed about US$35.2 billion.
With foundries as main customers, advanced packaging vendors were therefore essentially flat or slightly enhanced in 2012, the same expected in 2013. The fall in price of gold, the indispensable raw material for advanced packaging vendors, especially LCD Driver IC packaging companies, will improve the profit margin of advanced packaging vendors in 2013.
Vendors located in Malaysia and Singapore all showed decline, on account of the decreasing revenue of foundries in this region. Taiwanese peers saw moderate growth except memory package, chiefly benefiting from the strong drive of TSMC and UMC. South Korean companies were boosted by Samsung.
Among Japanese companies, J-devices experienced the highest growth, mainly owing to the back-end packaging business purchased from Fujitsu. In January, 2013, Japan’s largest semiconductor vendor – Renesas also sold three back-end packaging factories to J-devices, which would usher in amazing growth in the coming year, with expected annual revenue in FY2013 and FY2017 outnumbering JPY100 billion and JPY250 billion, respectively.
Taiwan-based Chipbond, the world’s largest LCD Driver IC packaging vendor, will be another eye-catching performer in 2013. The significantly enhanced screen resolution of mobile phone and tablet PC will greatly raise Chipbond’s earnings, and the decline in gold prices makes it the biggest beneficiary. In order to further improve the industrial chain layout, Chipbond acquired the COF substrate vendor - SIMPAL Electronics on May 2, 2013.
In addition, Chipbond is the advanced packaging vendor with the highest operating margin, i.e. 16.7% in 2011 and 21.9% in 2012, but also the unique one with operating margin growth. ASE closely followed in terms of operating margin, who benefitted from its large customer TSMC that produced the world’s state-of-the-art IC.
Chinese Mainland counterparts performed poorly, although JECT’s revenue saw substantial growth, yet its operating margin fell sharply from 1.8% in 2011 to 0.2% in 2012, slipping to the edge of loss.
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