- Published on 2015-08-21 17:40
- Written by Super User
Over the years a number of companies in the IC Components,semiconductor and semiconductor equipment community have been labeled as “Canaries in the Coal Mine.” Back in the mid-90′s my partner(s) at INFRASTRUCTURE tagged wire bond equipment supplier Kulicke & Soffa as one of the most important canaries. We had several reasons for doing this:
1) K&S tools are shipped to assembly houses with relatively short lead times. 2) Swings in demand for wire bonding tools typically preceded up and down turns in the semiconductor cycle by a few quarters.
Pretty straightforward stuff….
As time passed we continued to add indicators to our arsenal in an attempt to improve our sense of where the industry was headed. I say “attempt” purposely here because I will readily acknowledge that no set of indicators is perfect. By no means do I want to imply that we nailed every cycle turn. That said, gathering information about run-rates and subtle nuances in the food chain became a centerpiece of our work. “Eclectic” was how some described the collection of data points we accumulated .
Up and down the food chain we searched – starting with raw materials for wafer manufacturing all the way to those OSAT houses (Outsourced Assembly and Test) that were sending board-ready devices to the subcontract assembly business. As for the eclectic, here’s a few examples: We would ping companies that supplied the vegetable inkers that were used to mark bad devices during the final testing process - thinking that changes in the demand for vegetable ink (yes, vegetable ink) could be linked to variations in unit volumes. Along the same lines, monitoring die banks at the OSAT houses became important. Companies like Amkor, Silicon Precision Industries and Advanced Semiconductor Engineering often talk about die banks on their conference calls. Amkor’s Ken Joyce had this to say on their July 27 call:
“All we can say is what we see, I can’t speak for the entire industry, but what we see is that there has been a buildup in the die banks in our factories, and what does that tell us, and who are the customers that are building in there? Well, they’re actually one step, once the front end makes the decision to put those into production, they take them and they give them to us and that’s good news. I think what we’re seeing there is that our customers and their customers downstream are managing their inventories really very closely, and it probably is somewhat of a reflection of what I talked about a few minutes ago, this cloud of uncertainty that’s started to rise with respect to the demand picture.”
