Demo equipment deployed at ASE; results expected around November

Supply volume estimated at 40 billion won, around 60 units

Diversifying away from PSK Holdings as sole supplier

Entry into TSMC's advanced packaging ecosystem anticipated

The corporate logo of Systems Technology Incorporated. [Provided by Systems Technology Incorporated]
The corporate logo of Systems Technology Incorporated. [Provided by Systems Technology Incorporated]

Semiconductor equipment maker Systems Technology Incorporated is conducting a quality certification test to supply reflow equipment to Taiwan's ASE Group, seeking to extend the track record it built supplying SK hynix's high-bandwidth memory production lines to overseas back-end semiconductor manufacturers.

With ASE pushing to diversify its equipment supply chain, industry watchers say a successful entry by Systems Technology Incorporated could give the company a springboard into Taiwan's advanced packaging ecosystem centered on TSMC.

According to investment banking sources, Systems Technology Incorporated has deployed demo reflow equipment at ASE and is currently running the quality certification test. Results are expected around November.

Industry sources estimate the contract could be worth around 40 billion won ($29 million) if the test leads to mass-production supply. Each unit is priced at roughly 600 million to 700 million won depending on specifications, and the total supply volume is estimated at around 60 units.

A source familiar with the matter said ASE plans significant reflow investment next year and that Systems Technology Incorporated is preparing to secure a supply opportunity. "However, the timeline could be pushed back depending on how the test progresses," the source said.

Reflow is a back-end process equipment that uses heat to bond semiconductor chips. Systems Technology Incorporated has built up its credentials in the field by supplying related equipment to SK hynix's HBM production lines.

The backdrop to ASE's decision to test Systems Technology Incorporated's equipment is its drive to dual-source its supply chain. Among domestic Korean suppliers, Kosdaq-listed back-end semiconductor equipment maker PSK Holdings is currently the only company supplying reflow equipment to ASE. ASE is understood to be evaluating Systems Technology Incorporated's equipment in order to add a second supplier.

For Systems Technology Incorporated, this represents an opportunity to broaden its customer base. In the first half of this year, Samsung Electronics accounted for 45 percent of the company's sales and SK hynix for 31 percent, meaning the two together made up 76 percent of total revenue. If ASE supply begins, the company could leverage its SK hynix-proven reflow equipment to expand into overseas back-end manufacturers. As of the end of June, its total order backlog stood at 214.3 billion won.

Reflow is not yet a core business for Systems Technology Incorporated. According to its half-year report, sales from its central chemical supply system business reached 125.3 billion won in the first half of this year, accounting for 85.6 percent of total revenue. The Wet System segment, which includes reflow equipment, posted sales of 9.9 billion won, or 6.8 percent.

Still, a successful ASE supply deal could mark a turning point for the company's reflow business. Founded in 1984, ASE has held the top position in the global outsourced semiconductor assembly and test market for more than two decades, having overtaken US-based Amkor in 2003.

ASE is also a key partner in TSMC's advanced packaging ecosystem. Both ASE and Amkor participate as official outsourced semiconductor assembly and test partners in TSMC's advanced packaging alliance, known as the 3DFabric Alliance.

As demand for AI semiconductors grows, ASE has been expanding its advanced packaging investment. The advanced packaging market — including CoWoS, which integrates GPUs and other compute chips with HBM — is growing rapidly, prompting ASE to increase its production capacity. The company has raised its capital expenditure target to $10.5 billion this year and plans to double its advanced packaging revenue by 2027 from this year's level.

"If Systems Technology Incorporated builds a supply track record with ASE, it could be the catalyst for extending the reflow equipment credentials it established at SK hynix to global back-end manufacturers," an investment banking source said. "Given that ASE is a key partner in TSMC's advanced packaging ecosystem, it could also serve as a launchpad for expanding into the global advanced packaging market, including Taiwan."


hajun825@heraldcorp.com