Micron’s plant has been approved under the government’s “Modified Assembly, Testing, Marking and Packaging (ATMP) Scheme”.
Assembly, packaging & testing, unlike design and manufacturing, lies at the bottom of the semiconductor value chain and is considered relatively less skill- and capital-intensive. However, it's still a highly technical part of the whole process of making chips and its importance is growing fast. China is the leader in this segment with 38% share, followed by Taiwan at 27% and then nearly 16 per cent share of Japan and South Korea, according to a 2021 report by the Boston Consulting Group and the Semiconductor Industry Association.
What is assembly, packaging & testing?
Assembly, packaging & testing involves converting the silicon wafers produced by the fabs into finished chips that are ready to be assembled into electronic devices. Firms involved at this stage first slice silicon wafers into individual chips. Chips are then packaged into protective frames and encased in a resin shell. Chips are further rigorously tested before being shipped to electronic device manufacturers.
The back-end stage of the chip supply chain still requires significant investments in specialized facilities, says the report. Firms specializing in assembly, packaging and testing typically invest over 15% of their annual revenues in facilities and equipment. Although it is relatively less capital-intensive and employs more labor than the front-end fabrication stage, new innovations in advanced packaging are changing this dynamic. Overall, this activity accounts for 13% of the total industry capital expenditure and contributed 6% of the total value added by the industry in 2019.
Outsourced semiconductor assembly and testing (OSAT) companies provide assembly, packaging & test services under contract to both Integrated device manufacturers or IDMs (companies that make chips from the first stage to the last) as well as fabless companies which only design chips. This part of the supply chain was first offshored by some US IDMs starting back in the 1960s because of its lower capital intensity and the need for lower-skilled labour. The fabless-foundry model then also led to the emergence of specialized OSAT companies. Micron's Sanand plant will be an OSAT plant.
Why back end of chip-making is getting important
These days advances in chip performance rely more on the back end of production, including packaging, as innovation in design and packaging encounters limits.
The back-end process of packaging has been undervalued for two reasons: First, it’s still possible to package wafers using old-generation equipment. Second, packaging is mostly done by outsourced semiconductor assembly and test companies (OSATs) that compete largely based on low labor costs, rather than other sources of differentiation, according to a report by McKinsey and Company.
This model may change with the introduction of advanced packaging, which uses sophisticated technology and aggregates components from various wafers, creating a single electronic device with superior performance, says the McKinsey report. Introduced around 2000, advanced packaging is now gaining significant momentum as the next breakthrough in semiconductor technology.
Advanced packaging is helping to meet the demand for semiconductors that run emerging applications now going mainstream — for example, 5G, autonomous vehicles and other Internet of Things technologies, and virtual and augmented reality, the report says. These applications require high-performance, low-power chips that can rapidly process massive quantities of data.
In 1965, Moore’s law posited that the number of transistors on a chip would double every couple of years. But node advancement is now reaching its limits. As a result, technical advances on the front end of chip manufacturing are slowing, and the economically viable maximum size of a die, and thus its performance, are becoming more limited. New approaches in back-end technology that combine multiple chips offer a promising solution.
That's why Micron's OSAT plant is an important step towards India's chip-making goals
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June 23, 2023 at 08:48PM
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