Shortage There is a chip on film (COF) tape shortage. COF tape is a component that is necessary to for back-end service suppliers to package LCD driver ICs. Japan-based COF tape suppliers are not likely to resume some of their production lines that were suspended during the downturn. The reason for the hesitation is that resuming production will increase manufacturing costs while the likelihood of prices remaining depressed and going down further is very high.
According to Fei-Jain Wu, chairman of Chipbond Technology, a backend service provider, the COF tape market experienced a price war that brought significant downward pressure on the profitability of Japanese suppliers. Wu doesn’t expect the LCD driver sector material shortage situation to ease. Back-end packaging and testing capacity will continue to be tight. If this situation continues there will be a shortage of driver ICs and therefore finished LCD modules. This shortage comes at a time when demand for LCDs are starting to grow.
Capacity Rising Chipbond’s wafer testing and COG packaging is at full capacity. The company’s COF production capacity is expected to hit 90 percent in the second quarter. Other backend service companies including King Yuan Electronics (KYEC), International Semiconductor Technology (IST) and ChipMOS Technologies also have seen their production utilization rates increase to 80 percent or more.