STAMFORD, USA: The worldwide market for semiconductor assembly and test services (SATS) grew for the sixth consecutive year in 2007, according to preliminary results by Gartner Inc. Worldwide SATS revenue was up 7.4 percent at $20.6 billion. For the sixth year in succession, the SATS market continued to outpace the overall semiconductor market by more than 50 percent (overall semiconductor revenue grew 2.9 percent in 2007).

Packaging, assembly and test services have become important in the total semiconductor industry because a growing percentage of the total industry revenue is now attributed to this segment. The outsourcing portion of this back-end manufacturing process, known as SATS, has grown steadily since the recession of 2001.

"Integrated device manufacturers (IDMs) and OEMs continue to expand their adoption of the outsourcing business model," said Jim Walker, research vice president for Gartner. "Their resources are now more focused on design and distribution and less on manufacturing. The result is increased demand for outsourcing. This demand, combined with the increasing transition to advanced packaging technologies, propels the SATS industry."

The top five vendors maintained their rankings in 2007, but their total revenue grew by 4.4 percent compared with 10.4 percent growth by the rest of the industry. Advanced Semiconductor Engineering, of Taiwan, remained the leading provider of assembly and test services with revenue exceeding $3 billion. Amkor Technology, of Arizona, USA, stayed at No. 2. Siliconware Precision Industries (SPIL), of Taiwan, was the No. 3 vendor, as it increased its lead over Singapore's STATS ChipPAC. The highest growth among the top five was achieved by UTAC, of Singapore, with 18.5 percent growth taking its revenue to over $750 million. This was due to growth in testing, memory and leadless-lead-frame packaging.

For 2008, Gartner forecasts another year of growth for the SATS industry with initial estimates for 9.8 percent over 2007.