The Wall Street – The maker of Artificial intelligence equipment for semiconductor production plays a significant part in the chip supply chain.
Artificial intelligence necessitates ever-faster circuits, but manufacturing them is becoming increasingly expensive. That is why sophisticated packaging has become the current hot trend in the semiconductor business benefiting many including a lesser-known Japanese equipment manufacturer.
Chip packaging, or the process of putting chips into protective casings and connecting them to power and other components, was previously considered secondary. Much more effort was put into making the chips themselves quicker and smaller.
Artificial intelligence final step in semiconductor manufacture
The majority of chip packaging, the final step in semiconductor manufacture is outsourced to businesses that specialize in assembly and testing, with cost being a major concern.
As a result it isn’t a particularly appealing business. For example, Taiwan’s ASE Technology, the world’s largest chip-packaging and testing firm, had a gross profit margin of 16% last year, compared to 54% for Taiwan Semiconductor Manufacturing Co.
However, as chip size approaches the atomic level, it becomes increasingly expensive to compress devices even further. So the recent AI surge has brought improved packaging to the forefront.
The concept is straightforward: integrating multiple processors closely together in a package can reduce data transfer time and energy consumption.
Memory chips are one specific application, particularly with the surge in demand from AI. Data flow is accelerated by so-called high-bandwidth memory or HBM which arranges layers of memory chips in close proximity to the central CPU.
For instance, the H200 AI chip from Nvidia combines six HBMs with a dedicated graphics processing unit. Since the end of 2022 the value of shares of South Korean memory chip manufacturer SK Hynix has about tripled. It moved ahead of Micron Technology and Samsung Electronics as an early pioneer in HBM.
According to Morgan Stanley, 9% of semiconductor sales worldwide in 2023 came from advanced packaging. By 2027 the bank projects that to increase to 13%, or $116 billion.
The procedure is becoming increasingly important to the chip-fabrication process since it necessitates the integration of several chip types. Chip foundries are required to collaborate with other foundries in order to create the packaging.
Because of this TSMC has led the way in the development of Chip-on-Wafer-on-Substrate, or CoWoS technology. Producing additional AI chips has been hampered by the improved packaging technology’s limited capacity.
Intel and Samsung both use comparable technologies To collaborate on next-generation HBM and innovative packaging technologies SK Hynix and TSMC have teamed up.
The Japanese manufacturer of semiconductor equipment, Disco, is one business that has been having a great time in the background. The business produces equipment for dicing and grinding silicon wafers which are used to print semiconductors.
Chips piled together emphasize the importance of thinner wafers. Morgan Stanley calculates that sophisticated packaging accounted for about 40% of Disco’s sales.
Since the end of 2022, its stock has increased by more than five times. Although it might be more difficult to continue producing smaller chips, there are still plenty of chances if they are packaged in more creative ways.
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