Possible IC Packaging Shortages in 2018

Experts in semiconductor manufacturing are predicting longer lead times and higher demand for IC packaging in 2018.

This news comes during a time when the electronics industry is already facing several shortages and high volume demands for components such as OLED displays, DRAM, and NAND flash memory.
This shortage is being caused by a perfect storm of different factors, among which are poorly-forecasted demands for 2017, new high-demand industries, and longer wait times on raw materials. These factors go all the way down the supply chain, making for a complex issue to solve.
Currently, major vendors of IC packaging are experiencing high-to-full capacity production volumes, just barely keeping up. These vendors have experienced higher demand for their products than anticipated—instead of just a 3% growth, there was a 7% increase in IC packaging demand in 2017. Interestingly, the first two quarters of 2017 were as expected, but the last half of the year has seen a surge in demand.
Experts say that there appears to be a slight dip coming up in demand and they will have to wait and see what happens in Q1 2018 to know if this is a passing phase or a buck to the trend.

Not All Packing Is Created Equal

Not all IC packaging types are being affected. However, the more common and desirables ones have been naturally most affected, particularly the packaging types that rely on 200mm wafer bumping. These include:

• Chip Scale Packaging (CSP)
• RF Front-End Modules (RF FEM)

Fan-In Chip Scale Packaging. Image courtesy of STATS ChipPAC.

Unrelated to 200mm wafer bumping capacity, other IC packaging types facing shortages include:

• Quad-Flat No-lead (QFN)
• Wafer Level Packaging (WLP)

 

Top: QFN Packaging (via Wikipedia), Bottom: Wafer Level Packaging (image courtesy of © Raimond Spekking)

Further compounding wait times is the fact that the lead frames used in QFN are also in short supply. Fewer lead frame manufacturers are available, since many have turned to manufacturing connects or other electrical components that provide a higher margin on increasingly difficult to obtain copper-alloys. The wait time on lead frames has increased from 3 to 4 weeks, to as long a 10 to 12 weeks.
Closer to the end of the chain, manufacturers are also experiencing longer wait times on manufacturing equipment, which could help increase capacity. Wirebonders, for example, have had lead times as long as five weeks (a two-week increase from normal).
This rising demand in these specific IC packaging types can be attributed to front-end RF devices in mobile phones, components for automotives, and an increase in IoT applications—all three being areas that are expected to continue to grow in the coming years.

How Does this Impact Designers and Consumers?

If the IC packaging demand slows down, or if manufacturing capacity can keep up, then a short period of waiting might not be earth-shattering. It still isn’t the best news for smaller business or designers, who may still lose money on having to wait a few extra weeks for the components they need.
However, if a longer lasting shortages continue, it’s hard to predict what kind of outcome that could have. With the NAND flash memory shortage, there were concerns that too much inertia could be created by companies trying to make up for the shortage, saturating the market. So far that hasn’t occurred yet.
A shortage lasting a year or longer might start financially hurting some businesses or small companies. Longer shortages could force designers to start looking at alternative components and materials.
Have you experienced fallout from component shortages in 2017? Share your experiences in the comments below.


Featured image color-adjusted and resized. Courtesy of © Raimond Spekking.