Intel in FC-BGA Investment talks with Samsung
Intel (INTC) is getting the band back together, really restarting its foundry and contract chip production business. Money is not an issue or is talent for Intel, but building out a supply chain is a more daunting task as it involves negotiations that lead to financial commitments and living up to those requirements. One area that Intel needs to develop is in the packaging space, as raw semiconductors need to be connected to PCB boards, a process that has become exceedingly more complex as processors and other semiconductor devices grow larger.
It seems that Intel has already approached one of its packaging suppliers, Samsung Electro-Mechanics (009150.KS) and is in discussions about investing what is expected to be hundreds of millions of dollars in FC-BGA, a connection technology used in high pin count devices such as server and PC CPUs. However it does not seem that the two have reached an agreement of financial considerations, despite Intel offering to invest its own money first. There are only a few FC-BGA suppliers of note, which limits Intel’s potential choices, with some assuming the company has already had discussions with its two larger FC-BGA suppliers Japan’s Ibiden (4062.JP) and Shinko Electric (6967.JP) but no agreement has been announced.
While Samsung EM is a smaller supplier to Intel than Ibeden and Shinko, there are other smaller players that could potentially expand capacity over time, such as Daeduck Electronics (353200.KS) and LG Innotek (011070.KS) in Korea, Nanya (2408.TT) and Unimicron (3037.TT) in Taiwan, and AT&S (ATS.AV) in Austria, but competing against the Japanese and potentially Samsung EM, whose largest customer is parent Samsung Electronics (005930.KS) could prove difficult. Negotiations with Intel have continued since March.
It seems that Intel has already approached one of its packaging suppliers, Samsung Electro-Mechanics (009150.KS) and is in discussions about investing what is expected to be hundreds of millions of dollars in FC-BGA, a connection technology used in high pin count devices such as server and PC CPUs. However it does not seem that the two have reached an agreement of financial considerations, despite Intel offering to invest its own money first. There are only a few FC-BGA suppliers of note, which limits Intel’s potential choices, with some assuming the company has already had discussions with its two larger FC-BGA suppliers Japan’s Ibiden (4062.JP) and Shinko Electric (6967.JP) but no agreement has been announced.
While Samsung EM is a smaller supplier to Intel than Ibeden and Shinko, there are other smaller players that could potentially expand capacity over time, such as Daeduck Electronics (353200.KS) and LG Innotek (011070.KS) in Korea, Nanya (2408.TT) and Unimicron (3037.TT) in Taiwan, and AT&S (ATS.AV) in Austria, but competing against the Japanese and potentially Samsung EM, whose largest customer is parent Samsung Electronics (005930.KS) could prove difficult. Negotiations with Intel have continued since March.
Typical Flip-Chip Ball Grid Array - Cross Section - Source: https://en.wikichip.org/wiki/Flip_Chip_Ball_Grid_Array
Texas Instruments288GTS Ball-Grid Array Package - Source: https://en.wikichip.org/wiki/Flip_Chip_Ball_Grid_Array
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