Who set those standards? In the wake of outsourcing, alliances become increasingly important

Electronic News, July 22, 2002 by Bernard Levine

Companies are banding together to lead standardization and R&D efforts now that OEMs and IC houses are outsourcing more and more of their manufacturing, assembly and development, picking up the slack for an industry that no longer is dominated by any single company.

While contract manufacturers, front-end and backend foundries and others individually lack the money and clout to drive new standards, they are trying to achieve the same result through alliances, consortia and ties with universities.

A proposed initiative to get SEMI's backend and JEDEC's front-end IC standards-writing bodies to work together to promote cost-effective advanced packaging and interconnect standardization surfaced last week at Semicon West in San Jose.

Many believe that no single company today--not even IBM or Intel--has enough power to automatically drive de facto mainstream industry standards, so proponents hope to set up a joint meeting between JEDEC and SEMI standards groups for later in the year, Electronic News has learned. They are targeting cooperation on IC footprints, design and other key issues that could cut costs and lead to broader standardization and adoption of new advanced packaging technologies, such as wafer-level, flip-chip, chip-scale and others.

The recently formed Advanced Packaging and Interconnect Alliance (APiA) is a key supporter of the proposed joint effort. Semiconductor Equipment and Materials International (SEMI) reportedly already has signed on. Feelers have been put out to JEDEC, which has not officially responded, sources said.

"SEMI and APiA have officially agreed we will work together on standards," said Ellery Buchanan, senior VP at Ultratech Stepper and APiA chairman. "Conceptually, SEMI is willing to work with JEDEC also to close the gap between front- and backend standards."

Added Gil Olachea, president of Kulicke & Soffa's flip chip division, who is also APiA's standards co-chairman: "I am facilitating with others to bring the SEMI and JEDEC standards bodies together. Standards are not dovetailing. We need to establish advanced interconnect standards between the fab front-end and packaging backend." Issues include handling, design and materials, he said.

Alliances such as the APiA, formed last year and now 30-members strong, may be crucial as the once all-powerful QEMs and IC companies turn over more responsibilities to others.

"APiA aids infrastructure development and allows growth of low-cost products. No one has the resources to do things on their own anymore. Otherwise it's too expensive," said Jan Vardaman, president of research house TechSearch International. "The more you pull in standards people in front- and backend and agree on common footprints, the more likely you are to see increased growth and unit volume."

Meanwhile, other industry alliances are forming to share backend development and research efforts, fund university programs and take other steps to bolster industry infrastructure.

Among the latest moves, IBM will partner with Amkor Technology, Advanced Semiconductor Engineering, ASAT Holdings and ASAT to develop advanced flip-chip substrates and packaging. IBM also said it would work with Endicott Interconnect, which recently acquired IBM's Endicott, N.Y., packaging facilities. In addition, Amkor Technology and Unitive entered a strategic manufacturing alliance to collaborate on manufacturing services using Unitive's wafer-level packaging products and Amkor's packaging and test capabilities.

Many individual companies also hope to pick up the slack left by OEMs and semiconductor houses.

"With exceptions such as Intel and IBM, many integrated device manufacturers and OEMs have laid off engineers. Who will do process development and integration? Kulicke & Soffa's strategy is to help fill that gap," said Scott Kulicke, CEO of the assembly equipment maker.

Kirk Flatow, senior VP of marketing and sales at IP developer Tessera Technologies, sees opportunities for his company, a leader in chip-scale packaging. "We are about R&D and licensing," he said. "Many semiconductor companies are de-emphasizing backend R&D, but packaging is strategic. For example, it helps make cell phones smaller."

Tessera is not alone. Bruce Freyman, executive VP at Amkor, said an increasing number of integrated device manufacturers are downsizing their packaging R&D organizations and relying instead on Amkor to do that work.

Maybe today's new models are even better than the past, some believe.

"A lot of the old R&D was wasted," said Dan Hutcheson, CEO and president of VLSI Research Inc. "Companies such as Xerox, IBM and AT&T invented a lot of stuff they didn't use. It got reinvented later. Intel today is a good model for research. They fund a lot of research in universities and consortia while Intel Capital funds startups. In the old days, companies just threw money at research. Now, there is more direction. Everyone must show return on investment. It may not be direct return, but it will drive the economy 20 to 30 years out."