Where Can Advanced Packaging Bottlenecks Be Resolved?
Locate advanced packaging bottlenecks across wafers, memory, substrates, assembly, and testing. Learn why expanding one stage may not increase final shipments and how to calculate the effect of capacity additions.
An advanced packaging bottleneck occurs at the component or process stage that allows the fewest finished products to pass through. Even an announced expansion of specific equipment may deliver only a small increase in finished-product shipments if memory, substrates, or another process remain constrained.
Convert Required Components to a Common Unit
TSMC's 3DFabric brings together technologies for integrating multiple chips, and Amkor also describes various stacking and interconnection technologies. Analyzing these supply chains presents a problem: component suppliers report in different units. Logic chip counts, HBM stack counts, substrate counts, and wafer-based packaging capacity cannot be compared directly. First establish how many of each component are required per finished product, then convert supply into finished-product equivalents. If component requirements vary by specification, calculate them separately by product group.
Resolving One Bottleneck Reveals the Next Constraint
When a process is at full capacity, increasing output at an earlier stage may only build waiting inventory. Conversely, expanding the bottleneck process can turn the next stage, which previously had spare capacity, into a new bottleneck. When a company announces increased packaging capacity, also examine the balance of assembly, testing, and component supplies. Installed equipment counts may differ from effective capacity qualified by customers, so distinguish equipment move-in, quality qualification, yield stabilization, and actual shipments.
Supply Shortages Do Not Necessarily Increase Profits
Long lead times may reveal supply constraints, but their profit effect cannot be established without knowing contract prices and costs. There may also be expenses for rapid expansion, defects and rework, and obligations arising from schedules promised to customers. If several component suppliers each forecast strong demand from the same end customer, investors also risk double-counting final demand by adding them together. Connect packaging suppliers' orders to customers' server installation plans and use subsequent disclosures to check whether actual shipments follow orders. Work in process accumulating ahead of a bottleneck also ties up cash. Inventories and working capital may rise before supply expands, so check the timing of cash collection as well as improvements in final shipments.
Worked example
Hypothetical example: Monthly supply consists of 10,000 logic chips, 60,000 HBM stacks, and packaging capacity for 9,000 products. If each finished product requires 8 HBM stacks, memory supply supports 7,500 finished products. The final limit is therefore 7,500. If HBM supply increases to 80,000 stacks, packaging becomes the constraint at 9,000 products. This simplified example assumes all components are compatible and there are no yield losses; an actual model must incorporate final good-unit yield.
What to check
- Convert component supply into finished-product equivalents
- Identify where the bottleneck moves after expansion
- Distinguish installed capacity from fully qualified capacity
- Avoid double-counting final customer demand
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.