Analysis

Global semiconductor assembly market set to grow

30th November 2020
Alex Lynn

The global Semiconductor Assembly and Testing Services Market, is expected to surpass $249m by 2027, registering a CAGR of 4.04% during the forecast period of 2019 to 2027, as highlighted in a report by Coherent Market Insights.

Capabilities of high-quality SATS providers to let OEMs and ODMs to focus on their core business are expected to propel the global semiconductor assembly and testing services market growth during the forecast period.

Semiconductor process technology is migrating to larger wafers and smaller feature sizes. As a result of this, building wafer fabrication factories has become expensive significantly, costing around several billions of dollars. High initial investment required for next-generation technology and equipment has compelled various semiconductor enterprises to maintain or adopt a fab-lite or fabless strategy to reduce or remove their investment in wafer fabrication and associated packaging and test operations.

This, in turn, has aided ODMs to focus on their core business and increase dependence on outsourced providers of semiconductor manufacturing services such as testing and packaging. Thus, these factors are expected to boost the global semiconductor assembly and testing services market growth over the forecast period.

SATS providers are focused on increasing capacity utilisation rates by expanding existing capabilities. Leading SATS providers are leveraging advanced packaging and test capabilities to create reasonably quick returns on investments made consumers seeking leading edge technologies.

These organisations are also focused on advanced packaging technologies as well as a second wave of consumers who still prefer conventional packaging technologies, in order to fulfil capacity in case leading edge customers transition to newer packaging and test equipment and platforms. For instance, in 2013 and 2014, STATS chiPAC invested $46.4m and $39.2m respectively in R&D activities for improving its packaging solutions. This aided the company to increase its revenue from advanced packaging solutions by one percent from 2013, to account for 47.9% in 2014.

According to Coherent Market Insight's study, penetration of semiconductor devices in well-established end products such as automotive systems has increased, owing to rising utilisation of electronics for safety, navigation, fuel efficiency, emission reduction, and entertainment systems. Growing safety concerns and proactive initiatives by government to support safety systems are expected to drive the market growth in the near future. This, in turn, is expected to present excellent growth opportunities for market players in the near future to capitalise on untapped market potential. 

Majority of the consumers of SATS providers are part of semiconductor industry. Constant fluctuations in order levels and service fee has resulted in volatility in the revenues and net incomes. Frequently, semiconductor and electronics industries have experienced significant and sometimes extended downturns.

Since semiconductor industry is significantly reliant on independent packaging, testing, and electronic manufacturing services, and downturn in near future would decrease the demand for these services. For instance, in 2012, there was a loss of 28nm foundry capacity, owing to low revenues, lack of installed capacity, and underestimated requirements. Much of the 28nm demand involved chips for smartphones, tablets, and notebooks. Hence, such factors are expected to hamper the global semiconductor assembly and testing services market growth in the near future.

Market trends

Growing adoption of wearable devices in Asia Pacific region is a major trend in the market

Adoption of wearable devices such as smartwatch and fitness equipment has increased significantly in the recent past. This is owing to increasing utilisation of connected devices such as smartphones and tablets.

Semiconductor testing and packaging services providers are focused on expanding their business in emerging economies such as India, China, and South Korea to gain competitive advantage in the regional market.

Technological advancements in automotive electronics are expected to boost the demand for semiconductor testing and packaging services

Advancements in technology in automotive electronics in next-generation cars that are installed with high-end electronic components to improve car’s performance has increased the demand for semiconductor packaging and testing services significantly.

Rising adoption of advanced electronics in sophisticated engine and safety controls, especially in hybrid electric cars is expected to boost the market growth in the near future.

Competitive section

Key companies operating in the global semiconductor assembly and testing services market are ASE, Powertech Technology, Global Foundries, Amkor Technology, CORWIL Technology, Integrated Microelectronics, STATS chipPAC (JCET), Chipbond Technology, and Silicon Precision Industries Company.

Key developments

  1. Key companies in the market are focused on forming joint venture, in order to gain competitive edge in the market. For instance, in 2015, ASE Group entered into joint venture with TDK with a new name: ASE Embedded Electronics. This venture specialises in manufacturing IC embedded substrates.
  2. Major market players are focused on product development, in order to enhance market presence. For instance, in June 2015, Global Foundries developed a new digital design flow for Register-Transfer Level (RTL) to Graphic Design Database System (GDS) implementation, in collaboration with Mentor Graphics, Cadence Design Systems, and Synopsys.

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