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    Backend specialists moving to tap booming demand for automotive chips


    International IDMs have turned conservative about outsourcing packaging services for ICs needed to power mobile communication and consumer electronics devices, undermining Taiwan backend service providers’ chances of achieving high revenue growth at least in the first half of 2019. But they are stepping up R&D efforts seeking to tap more business opportunities arising from the booming demand for automotive ICs in 2020, according to industry sources.

    The sources said that IDMs such as STMicroelectronics, Texas Instruments (TI) and Renesas have given conservative market outlooks for the fourth quarter of 2018 through the first half of 2019 due mainly to lackluster sales performances of smartphones, wearable devices and household electrical appliances. This has slowed down their packaging outsourcing business to Taiwan backend service providers before shipment momentum can be resumed in the second half of 2019.

    Nevertheless, Taiwan backend service specialists including ASE Technology Holding, Ardentec, King Yuan Electronics and Sigurd Microelectronics are likely to land from customers the orders originally placed with their China counterparts including Tongfu Microelectronics, Tianshui Huatian Technology and Jiangsu Changjiang Electronics Technology, amid the lingering US-China tariff war.

    Meanwhile, some IDMs including On-Semi and Sony are striving for larger market shares for automotive CMOS sensors, allowing Kingpak Technology and others dedicated to packaging CIS devices to stay optimistic about market prospects for 2019.

    As automotive electronics and autonomous driving are gaining momentum for long-term development, demand for diverse auto-use chipsets such as MCUs and CIS devices has prompted Taiwan backend service providers to step up their capacity deployments to win more packaging orders from IDMs.

    Despite the US-China trade conflicts, China businesses are still aggressively building 5G ecosystems and therefore demand for packaging high-performance chipsets from the sectors of smartphones, edge computing, datacenters and base stations are likely to emerge in the short term to benefit Taiwan backend specialists.