Surface mount drives growth spurt in 1993

Electronic News, Jan 4, 1993 by Bernard Levine

The rapid changeover by system houses to surface mounting and other advanced packaging and board assembly techniques could drive growth this year in a band of markets, including passive and active components, materials, production and assembly equipment and contract manufacturing.

System makers seeking size reduction, increased automation and other advantages of surface mount board assembly have been migrating to miniaturized chip capacitors and resistors, along with ICs housed in small outline (SOIC), quad flat pack, pin grid array and other surface mountable packages. Growth of surface-mount parts is expected to continue in the New Year at the expense of veteran leaded and dual-in-line packaged (DIP) devices aimed at older through-hole board assembly.

Meanwhile, greater adoption of surface-mounting and other technologies may also trigger more demand for wire bonders, pick-and-place machines, chip shooters, and other component production and board assembly gear. High price tags for surface mount equipment, however, as well as expensive machinery needed for other looming packaging technologies such as tape automated bonding (TAB) and multichip modules (MCMs) have convinced a sizable number of system houses to farm out board production to outside assemblers. The contract houses, in turn, have become leading customers of advanced surface mounts and components.

"The conversion to surface mounting is continuing to drive things," said Chuck Volpe, executive vice-president of capacitor maker Kemet Electronics. "Surface mount is now over half of our business. In surface mount, we are growing in high double digits. We sell every bit of capacity we add, and we are adding more."

Competitors are also bolstering their surface mount capabilities. "We are putting on surface mount capacity like gangbusters," said Don Alfson, president of Vishay Electronic Components, responsible for its Dale and Sprague resistor and capacitor lines. "We continue to reinvest most of our profits, and most of those investments are for surface mount equipment. Large OEMs would like to go primarily to surface mount."

"Surface mount remains a strong trend," noted Jack Driscoll, Murata Erie North America senior vice president of marketing and sales, while AMP's Ted Dalrymple, vice president of global marketing, said "Surface mount gets more attention as time goes on."

IC makers are also turning more attention to surface mounting. Texas Instruments fellow Walter Schroen recently said surface mount is "projected to be the overwhelmingly dominant packaging and assembly technology in the second half of this decade."

The combined value of SOICs, quad flat packs and other surface mount IC packages already surpasses the automatically insertable DIPs, according to research house Electronic Trend Publications, with DIPs projected to decline in coming years.

Older leaded passives are also feeling the pinch, although with many OEMs maintaining some through hole board assembly, many parts suppliers continue to offer leaded components. "The shift is to more surface mount from leaded," said Vishay's Mr. Alfson, "Leaded will not disappear. It is on a downward trend, but will level off."

According to Kemet's Mr. Volpe, "Leaded capacitors have been down 2 to 4 percent a year. It is a long-term trend. Maybe a good year for leaded would be flat. In '93, it may be flat to down 2 percent." Mr. Volpe added Kemet "will stay in leaded, particularly for our partnership customers, who need leaded and surface mount." AVX's CEO Marshall Butler said, "Today, capacitor units are well over 75 to 80 percent in surface mount." He suggested declining leaded cap volumes are preventing AVX and other component firms from wringing more costs out of the products, so some leaded prices may hold steady or rise.

While surface mount has reduced sales of leaded components, it has increased business for makers of production and assembly gear.

"Customers have new products requiring new assembly processes, including finer pitch and TAB," said Eric Berg, Universal Instruments vice president of sales and service. "They might need new equipment to go below 20-mil pitch. Surface mount is continuing to finer and finer pitch," with Universal currently developing flexible machinery to place quad flat packs more quickly.

At Kulicke & Soffa, Shlomo Oren, vice president of marketing, said "In '93, there will be demand for more surface mount equipment." He added "There is a need to replace older packaging assembly equipment dating to the early '80s. There are a lot of SMT applications, but TAB is in a holding pattern. Many want to see where U.S.-based TAB takes us. It is not clear if TAB will take off, or if customers will leap frog to flip chip from wire bond." As for multichip modules, he said "We do provide wire bond technology and flip chip, but you wont see major volumes before '95."

"We see a good year in front of us, with growth due to capacity needs and packaging/technology driven," said Mr. Oren--also expressing caution for the latter half. "Right now, there is very healthy growth for assembly equipment, with a lot coming from subcontractors in the Far East."