SAN JOSE - Outsourcing of IC packaging assembly has fully resumed as unit growth reached double-digits the past three years. Contractors will continue to inherit a growing percentage of the IC packaging business as semiconductor manufacturers focus on the front end.

That's according to Electronic Trend Publications, a San Jose-based research firm. In a just released report, "The Worldwide IC Packaging Market," ETP finds that the worldwide IC market grew 28% in 2004 to $179 billion - surpassing the 2000 peak of $177 billion. IC units hit 105 billion, up 53% since 2001.

The firm says unit growth will ease this year, in line with past performance in which high unit growth has topped out after three consecutive years. Solid unit growth should return in 2006-2008 before softening in 2009.

ETP forecasts shipments will grow from 105 billion units in 2004 to 164 billion units in 2009, a compound annual growth rate of 9.3%. IC revenue growth should nearly equal unit growth, the firm says.

A total of 33.7 billion ICs were assembled by contractors in 2004, an increase of nearly 40% year-on-year. Contractors assembled 32% of the world total, up 5.3 points from 2003, and will reach 37% by 2009, ETP says.

Source: ETP. Units in billions. Numbers rounded. *Through 2009.