The top 8 advanced packaging players dominate the market and continue with heavy investment.
• The advanced packaging industry is expected to have a 9.6% CAGR (Compound Annual Growth Rate) between 2021 and 2027 to $65 billion.
• The advanced packaging segment as compared with traditional packaging market continues to increase, with more than 50% of the market by 2027.
• The highest advanced packaging market share belongs to the Flip-Chip platform, with 70% of the market in 2021. The highest CAGR is expected from ED , 2.5D/3D, and fan-out at 24%, 14%, and 11%, respectively.
Six players, including 2 IDMs (Intel and Samsung), a foundry (TSMC), and the top 3 global OSATs (ASE, Amkor, JCET), process over 80% of advanced packaging wafers. OSATs accounted for 65% of the advanced packaging wafers in 2021. Foundries are taking advanced packaging business from OSATs with 14% and IDMs with 21%.
IC substrate and PCB manufacturers, including SEMCO, Unimicron, AT&S, and Shinko, are entering the advanced packaging arena. They offer panel-level fan-out packages and embedded dies (and passives) in organic substrates in response to the accelerated adoption of fan-out packaging. These players are taking advantage of their substrate manufacturing know-how, panel line and equipment availability, and thin RDL technology development.
On the other hand, OSATs are expanding their testing expertise, while traditional pure test players are investing in packaging & assembly capabilities. Top OSATs are investing in IC testing capacity to capture the test market, and pure test houses, such as KYEC and Sigurd Microelectronics, are adding packaging/assembly capabilities in their service offering through M&As or investing in R&D.
Overall, there is a paradigm shift in the packaging / assembly business, traditionally the domain of OSATs & IDMs. Players from different business models, foundries, substrate/PCB suppliers, and EMS/ODMs are entering packaging & assembly, cannibalizing the OSAT business.
Substrates have been in tight supply due to strong demand for high-end CPUs, GPUs, and 5G networking chips by major chipmakers. The COVID-19 pandemic, high inflation, and geopolitical tensions are continuing to negatively impact material supplies. The delivery lead time of ABF substrates has been extended to nearly three quarters from 4-5 months due to demand growth outpacing capacity expansion, and prices have risen from 15% to 25%.