The semiconductor industry has enjoyed unprecedented growth in the last 15 years, fueled by smartphones, big data, 5G, and the AI revolution. As we look into the future, Moore’s law as we know it will continue to slow down as Si transistor scaling continues to be very costly as only a few players remain able to invest in the capital infrastructure necessary. Intel’s 7 nm delays are also evidence that only a select few players will remain as the technology node reduces to sub 5 nm.
The market research and strategy consulting company, Yole Développement (Yole), delivers its vision of the advanced packaging industry and its evolution in a dedicated monitor, the Advanced Packaging Quarterly Market Monitor. It records market shares, capacity, CapEx, shipments, and revenue and tracks this on a quarterly basis. It covers the FO-WLP, FO-PLP, WLCSP, FCCSP, FCBGA, and 3D Stacked packaging markets. It also tracks the top 18 packaging players globally.
In this era of post-Moore’s law, advanced packaging has become a critical and effective lever for the foundries/IDMs to use to increase device performance and bandwidth. Hence, heterogeneous integration will define the next decade, where system-in-package, 3D stacked devices such as CoW (Chip on Wafer) or WoW (Wafer on Wafer), interposer-based or an RDL-build-up approach will close the gap between Si and substrate.
The semiconductor industry in 2020 was resilient and experienced strong growth as the top OSATs showed unprecedented growth in Q4 2020 and, in fact, throughout 2020 as the global pandemic took shape. Many OSATs, IDMs, and OEMs experienced +15-20% growth in revenue and increased gross margins compared to 2019.
Rising CapEx in 2021 by top OSATs in advanced packaging
In the race for heterogeneous integration, key players, such as ASE (w/SPIL & USI), TSMC, Intel, Amkor, and JCET, have announced unprecedented CapEx investment in 2021.
Driven by a pandemic boom, the semiconductor industry continues to thrive on robust demand driven by the work-from-home ethic and increased demand for automotive and data centers. FY 2021 is shaping up to become a “Banner Year” for key OSATs and IDMs/foundries such as TSMC.
TSMC is planning to spend an estimated $2.5-$2.8 billion CapEx in 2021 to gear up new advanced packaging factories with InFO based devices, CoWoS, and SoIC-based product lines. TSMC generated an estimated $3.6 billion revenue through its advanced packaging offering in 2021 and is poised to reach new heights in the cluster of top OSATs.
ASE has also announced an estimated $2 billion CapEx investing specifically in the booming system-in-package business through EMS activities, as well as its wafer-level packaging business. ASE remains a top OSAT after the acquisition of SPIL and USI. Markets such as wearables, 5G, smartphones, and automotive remain top contenders for the system-in-package business. Amkor as well has achieved record revenue in 2020 with its first-ever crossing of the $5 billion threshold. Amkor is expected to spend an estimated $700 million CapEx in 2021, which is about 1.5 times more than 2020. Amkor continues to strengthen its business in system-in-package – its mainstream product line – and wafer-level packaging products.
Finally, Intel has recently announced that it will invest ~$20 billion in building new fabs in Arizona. It will also invest in advanced packaging collaborations as it expands its Foveros/EMIB “hybrid” packaging manufacturing in its Arizona and Oregon factories, enabling die-to-die interconnects and accelerating the future of hybrid bonding in competition to TSMC’s SoIC product line offerings.
2021 expected to be a Banner Year as OSAT revenue creates new benchmarks amid HDI substrate shortages
2020 experienced many unusual events, such as the global pandemic, temporary slowdown in the automotive market followed by a sudden and quick resurgence, continued US & China trade tensions, and the US election impacting on the global geopolitical stage. 2020 also saw a significant shortage of HDI substrate and issues with chip supply supporting automotive makers.
Amid these shortages – and high demand – OSATs increased their gross margins to almost 17-20% compared to the low teens in 2019. Amkor reported the first-ever breaking of the $5 billion revenue ceiling, a 20% increase in revenue compared to 2019 as demand for system-in-package, flip chip, and wafer-based packages remained exceptionally strong. ASE declared a record $16 billion revenue which makes it a “super” OSAT cranking on all cylinders as it back-fills the loss of business from Huawei and solidifies its EMS business with USI.
TSMC continues to march steadily onward. It is covering more advanced packaging ground, with revenue of around $3.6 billion coming from packaging activities, such as InFO variants, CoWoS, and upcoming SoIC type package product lines. TSMC, with $3.6 billion revenue in 2021, is coming up fast in OSAT rankings. It remains a leader now reaching 4th position. ASE and Amkor remained the other clear leaders as they take more market share in SiP and wafer-based packages for mobile and the consumer markets. ASE grew from a $13 billion company to a staggering $16 billion company. Its growth is predominantly due to the skyrocketing of its EMS system-in-package business, and it continues to show strong projections well into 2022.
Amid this dynamic 2020, the packaging industry experienced shortages of high-density substrate for automotive, data centers, and high-end applications. This shortage created capacity constraints at substrate suppliers causing substrate prices to increase by 20-50%, especially in Q4 2020. This scenario is continuing well into 1H’2021. OSATs also benefitted from an assembly price increase and, in most instances, passing this increase onto the end customer as a substrate cost increase. OSAT packaging factory utilization is expected to stay 80%+ for the 1H’2021 as OSATs continue to add more capacity to their flip chip and wafer-level infrastructure.
Advanced packaging outlook for 2021
2021 is looking to be a “Banner Year” for the OSATs. As we look ahead, strong growth in mobile and consumer markets with increased 5G adoption, rise in laptops, and explosive growth in the wearable markets.
Networking, infrastructure, servers, and AI are expected to increase incrementally as more compute and storage power is needed to meet a “Post-Pandemic” hunger for connectivity and data. We expect 2021 to reach new heights for foundry, IDM, and OSAT players..
Yole’s Advanced Packaging Quarterly Market Monitors is published every beginning of March (Q1), June (Q2), September (Q3) and December (Q4). The aim of Yole’s team is to give a closer look at the main markets and players. In addition to WLCSP and FO, the Advanced Packaging Quarterly Market Monitor will soon cover 2.5/3D and FC packaging and much more…
Stay tuned to i-Micronews to get further info. about our Advanced Packaging activities!
3D Packaging plays a pivotal role to re-invent integration architectures…
- Favier Shoo, Team Lead Analyst, Yole Développement (Yole)
- Belinda Dube, Technology & Cost Analyst, System Plus Consulting
- Max Min, Director, Samsung Foundry
About the Advanced Packaging team
Vaibhav Trivedi is a Senior Technology & Market analyst at Yole Développement (Yole) working with the Semiconductor & Software division. Based in the US, he is a member of Yole’s advanced packaging team and contributes to analysis of ever-changing advanced packaging technologies. Vaibhav has 17+ years of field experience in both semiconductor processing and supply chain, specifically on memory and thermal component sourcing and advanced packaging, such as SiP and WLP. Vaibhav has held multiple technical and commercial lead roles at various semiconductor corporations prior to joining Yole.
Vaibhav holds a Bachelor of Science in Chemical Engineering, and Master of Science of Material Science from University of Florida, in addition to an MBA from Arizona State University.
Stefan Chitoraga is a Technology and Market Analyst specializing in Packaging and Assembly at Yole Développement (Yole). As part of the Semiconductor, Memory & Computing division at Yole, Stefan is focused on advanced packaging platforms and processes, substrates, and PCBs. He is involved daily in the production of technology & market reports and custom consulting projects.
Prior to Yole, Stefan served as a Package Design Engineer at Teledyne E2V for 4 years, where he was in charge of the ceramic package and glass lid development for image sensors, developing mechanical design, routing, electrical and thermal simulations.
Stefan holds a Bachelor’s in Electronics and Computer Science for Industry Applications from the Polytech Grenoble (France).
Favier Shoo is a Team Lead Analyst in the Packaging team within Semiconductor, Memory and Computing Division at Yole Développement (Yole), part of Yole Group of Companies. Based in Singapore, Favier manages an international team and develops the technical expertise and market know-how within the team. Favier also focuses on the production of technology & market reports, conducts strategic consulting and custom studies.
Favier holds a Bachelor’s in Materials Engineering (Hons) and a Minor in Entrepreneurship from Nanyang Technological University (NTU) (Singapore). Favier was also the co-founder of a startup company where he formulated business goals, revenue models and marketing plans.
Santosh Kumar is currently working as Principal Analyst and Director Packaging, Assembly & Substrates, Yole Korea. Based in Seoul, Santosh is involved in the market, technology and strategic analyses of the microelectronic assembly and packaging technologies. His main interest areas are advanced IC packaging technology, including equipment & materials. He is the author of several reports on fan-out / fan-in WLP, flip chip, and 3D/2.5D packaging.
Santosh Kumar received the Bachelor’s and Master’s in Engineering from the Indian Institute of Technology (IIT), Roorkee and University of Seoul respectively. He has published more than 40 papers in peer reviewed journals and has obtained 2 patents. He has presented and given talks at numerous conferences and technical symposiums related to advanced microelectronics packaging
Emilie Jolivet is Director of the Semiconductor & Software Division at Yole Développement, member of the Yole Group of Companies, where her specific interests cover package & assembly, semiconductor manufacturing, memory and software & computing fields.
Based on her valuable experience in the semiconductor industry, Emilie manages the expansion of the technical and market expertise of the Semiconductor and Software Team. The team interacts daily with leading companies allowing semiconductor & software analysts to collect a large amount of data and integrate their understanding of the evolution of the market with technology breakthroughs.
In addition, Emilie’s mission focusses on the management of business relationships with semiconductor leaders and the development of market research and strategy consulting activities inside the Yole group.
Emilie Jolivet holds a Master’s in Applied Physics specializing in Microelectronics from INSA (Toulouse, France).
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