Driven by a strong semiconductor market outlook and aggressive investment in advanced packaging capability fueled by strong government support, advanced packaging revenue in China is expected to reach $4.6B in 2020 at an impressive 16% CAGR.
What is driving the advanced packaging market in China?
China has the world’s largest population, and its economy will continue to grow at a high pace (more than 6%), reaching around $16T by 2020. Also, an increase in per capita income (more purchasing power) will ensure China remains a dominant market in the coming years. No business can afford to ignore China.
China commands a significant market for key electronic products. In fact, over half of all key electronic products are consumed in China. In 2014, the Chinese smartphone, LCD, notebook/tablet, and wearable markets were around 81%, 63%, 71%, and 47% of the global market, respectively. The global IC market will grow by a CAGR of 4% from 2014 - 2020, while the Chinese IC market will grow by 7% over the same period. The Chinese IC market is expected to reach ~$149B by 2020, around 40% of the total IC market.
There is a huge gap between China’s IC consumption and its manufacturing. In 2015, China produced only ~12.5% of the IC it consumes, and the gap between IC consumption and production is ~$91B. Currently, IC is China’s #1 import commodity, exceeding oil.
China considers the IC industry to be a key strategic sector. The Chinese government is making a significant effort through funding and a national IC policy, with an aggressive growth strategy to make China an IC design and manufacturing hub. The goal by 2030 is to become the global leader in all primary IC industrial supply chain segments.
This report gives an overview of China’s semiconductor ecosystem and discusses in detail the country’s advanced packaging market.
This report describes China’s semiconductor outlook, prospects, market drivers, key players, and supply chain evolution. It discusses at length the Chinese government’s approach to developing China’s IC industry, including details about different private funds, their objectives, and investments made to date. Overall, this report helps local and global players identify challenges and opportunities in the Chinese IC market and assist them in developing strategies to maximize their market share in China’s fast-growing IC ecosystem, particularly in advanced packaging.
Last year, more than $1B was invested in China’s advanced packaging ecosystem - and there’s much more to come!
Right now, more than 100 companies are involved in assembly & packaging activities in China. Almost all key global IDMs and OSATs have a packaging facility in China to take advantage of low costs. Of all the assembly & packaging units in China, more than 2/3 are small players engaged in low pin-count devices and focused on the Chinese market. Most companies are concentrated in the “Yangtze River Delta” area, comprising Jiangsu, Shanghai, and Zhejiang provinces, and also the Pearl River Delta area of Guangdong province.
We have identified 128 players in China that are involved in the assembly & packaging segment, and the majority are back-end assembly units of global IDMs. Out of the 128, 17 (13%) are engaged in advanced packaging activities, and half of them are Chinese entities. Key Chinese OSATs with advanced packaging capability include JCET, Huatian, Nantong Fujitsu, and China WLCSP.
China’s advanced packaging industry took a giant leap when JCET acquired STATSChipPAC in 2015 for $780M. The deal was a game-changer and propelled JCET into 4th place amongst OSATs. Other notable acquisitions are Huatian acquiring FCI, and Nantong Fujitsu acquiring AMD backend facilities in China and Malaysia.
We estimate the advanced packaging market in China to be ~2.5B in 2016 and we expect it to reach ~4.6B in 2020 at an impressive CAGR of 16%. Over the same period, the global advanced packaging market is expected to grow at a 7% CAGR.
Total wafer bumping capacity in China is expected to reach ~8M 12”wpy by 2020, at an 18% CAGR. In 2015, there was more 8” bumping capacity in China than 12”. However, we see a huge increase in 12” capacity by 2020, with growth led by the huge capex in 12” Cu pillar and WLCSP line. Cu pillar growth will be led by mobile/wireless sensor, while WLCSP growth will be spearheaded by CIS and fingerprint sensors. Additionally, we see an increase in Au bump capacity to fulfill China’s increasing demand for display drivers in high-performance TVs, i.e. 4k2k display.
This report focuses on the Chinese advanced packaging market, including forecasts by packaging technology, wafer capacity (breakdown by players and technology), key Chinese and global players’ activities, and government IC policy/initiatives. This report also covers supply chain evolution and an analysis regarding OSAT strategy/direction, as well as the opportunities/challenges for local and global players in China’s advanced packaging space.
The Chinese government has employed a multi-pronged strategy to support domestic IC industry development in order to achieve the goal of becoming the global leader in all primary IC industrial supply chain segments by 2030. Over the last few decades the Chinese government has supported the domestic IC industry, but with limited success. One key reason for failure was the bureaucratic approach to resource allocation, which was by nature inefficient. This time around, the government is adopting a market-based approach where funding is available for investment in the form of equity investments rather than subsidies in invested companies. The goal is to generate return on investment while simultaneously aligning with government policy.
Local equipment and materials suppliers for advanced packaging: a key bottleneck in the local supply chains?
While Chinese OSATs and foundries are rapidly acquiring advanced packaging capabilities, the local equipment and materials supply chains are still far behind compared to global players, who still dominate the advanced packaging equipment and materials space. The question is, will this remain true over the next five years? Do global suppliers see China’s advanced packaging market as an opportunity or a threat (from local suppliers)? What is the market size? Which local players are involved in the equipment/materials segment? What are their strategies? In this report’s equipment/materials section, Yole Développement addresses these questions and other issues.
Objectives of the Report
This report’s objectives are to:
- Provide insight into China’s IC ecosystem, particularly the advanced packaging segment
- Define the factors driving China’s advanced packaging market
- Offer data and forecasts pertaining to China’s installed advanced packaging wafer capacity, by players and technology
- Advise about the Chinese government’s IC policy and present details of China’s IC investment fund
- Identify opportunities and challenges in China’s advanced packaging segment and help local and global players to formulate a strategy that maximizes their market share in China
- Furnish details of the Chinese advanced packaging equipment & materials market, i.e. key players, challenges/opportunities, etc.