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World Semiconductor Advanced Packaging Market to Reach $49.2 Billion by 2026

Amid the COVID-19 crisis, the global market for Semiconductor Advanced Packaging estimated at US$35.7 Billion in the year 2022, is projected to reach a revised size of US$49.2 Billion by 2026, growing at a CAGR of 7.6% over the analysis period. Flip Chip Packaging, one of the segments analyzed in the report, is projected to grow at a 7.2% CAGR, while growth in the 2.5d/3d Packaging segment is readjusted to a revised 10.1% CAGR. Growth in the global market is driven by the growing trend of miniaturization. Constant transitions and miniaturization of nodes were regular features that the industry faced, and now ULSI fabrication resulting in increased wafer sizes are further driving market growth. With many companies focusing more on R&D, there is rise in the number of manufacturers who offer innovative products. Factors such as growing numbers of consumers using electronic appliances, consumer preference for lighter, thinner, and smaller products driving the need for electronic products with advanced architecture, and the growing demand for connected devices such as tablets and smartphones are also driving growth of semiconductor advanced packaging market.

The requirement for better performance chips in consumer electronics is mainly underpinning the growth of the advanced packaging market. Further, the growing use of 2.5D packaging in chips and 3D IC in smartphones and other mobile devices is anticipated to spur advanced packaging demand. Growing interest in device miniaturization in various sectors is driving market gains. The widespread use of latest semiconductor tool is likely to boost the usage of various advanced packaging techniques. Also, the increasing R&D activities and innovations made by leading companies in the market are expected to support market growth. The expanding IoT market is also expected to drive the need for semiconductor packaging. Growing awareness of the benefits of advanced packaging in comparison to traditional packaging technologies is also boding well for the market.

But the significant costs associated with advanced packaging and the high cost of maintenance related to these systems is hampering the growth of the market. Also, the widespread concerns related to COVID-19 are restricting the market. The pandemic which has caused manufacturing activities globally to come to a halt has negatively impacted the demand for advanced packaging. Aerospace and defense, healthcare, automotive, and consumer electronics are the advanced packaging application areas that have been the most affected. There also has been a shortage of important raw materials for advanced packaging on account of the COVID-19 crisis. Further, the lack of technology standardization is limiting market growth. Innovations Key to Drive the Advanced Packaging Market

Technological innovations in semiconductor packaging are mainly based on the wafer size, which is giving rise to increased attention on wafer-level packages, in turn resulting in the introduction of innovative solutions in the chip industry. Most manufacturers are focused toward production of wafers of larger diameters due to increasing demand. Consequently, the manufacturing costs are expected to come down, leading to the development of more advanced packaging solutions. An emerging alternative to 2.5D packaging is the sub-segment of fan-out technology, which could handle multiple dies as against the fan-in wafer-level packaging that could handle only single die. Fan-out technology is experiencing significant growth due to its ability to eliminate the need for various process flows including under-fill dispensing, curing, cleaning, water fluxing, and flip-chip assembly.

The advanced packaging market is led by the flip-chip segment that is predicted to maintain its lion`s share over the coming years. The market is estimated to witness impressive performance of 2.5D/3D and fan-out categories that are slated to gain from increasing use across different applications. The fan-in WLP (WLCSP) category is dominated by mobile and estimated to post a decent growth through 2026. While the embedded die market accounts for a smaller share of advanced packaging, it is forecast to exhibit a solid growth rate due to strong contribution from the automotive, mobile and telecom & infrastructure domains. On the other hand, outsourced semiconductor assembly and tests (OSATs) remains the commanding segment of the advanced packaging market in terms of wafer starts. However, the high-end segment of the market is dominated by leading foundries. The segment encapsulates 2.5D/3D stacking and high-density fan-out options. Leading companies in the segment are making significant investments to come up with innovative options and move packaging from the substrate towards silicon/wafer platform.

The global advanced packaging market is served by numerous companies, with some of them investing big in new projects and strategies. TSMC is one of the leading players on the market that maintains a consistent focus on advanced platforms like SoW, SoIC and InFO variants along with CoWoS product lines. On the other side, Intel is investing in advanced packaging solutions under its ambitious IDM 2.0 strategy, including EMIB, Foveros, and Co-EMIB. The company is looking forwards to leverage its internal and external manufacturing resources for innovative designs, pushing the market share and cementing position in the datacenter space. Samsung is also making huge investments in advanced packaging solutions to strengthen the foundry business and compete with TSMC. In addition, leading OSATs are investing in technologies for tapping the lucrative market. While the packaging & assembly business has long been served by IDMs and OSATs, it is witnessing increasing influx of other players like foundries, EMS/DM and substrate or PCB suppliers.

Among the many emerging trends, the key trends that are expected to steer the global semiconductor advanced packaging market are the incorporation of semiconductor components in automobiles, changes in wafer size, and growing merger and acquisition (M&A) activities. During the past 5 decades, the semiconductor industry experienced drastic progression in wafer size. The industry is increasingly concentrating on production of larger-diameter wafers, and this move is expected to reduce manufacturing cost by 20% to 25%. The semiconductor industry was using wafers of 300-mm in 2016. Now foundries are investing in the development of more fabs of that type. For example, SK Hynix is starting an M14 fab in South Korea for the 300-mm technology. However, 200-mm wafers are also continue to be in demand during the next few years, because as many semiconductor devices including image sensors, display drivers, microcontrollers, and some MEMS-based products such as accelerometers still utilize 200-mm wafers in production processes. Now, the industry is planning for the development of 450-mm wafer technology, with a scheduled pilot production.

Growing demand for automation in automobiles and electrification of vehicles is driving this sector of the semiconductor market. Semiconductor ICs are used in automobiles for purposes such as GPS, airbag control, anti-lock braking systems, infotainment systems, automated driving, displays, collision detection technology, and power doors and windows. For these purposes, the semiconductor devices need to be in the exact form factor and of small size. This need in the automotive sector would further drive demand for semiconductor advanced packaging solutions. With the automotive market expected to grow due to the rising annual numbers of car production, significant demand would be generated for semiconductor devices, and this in turn would trigger demand for advanced packaging solutions during the forecast period.