Semiconductors are special type of material that have value conductivity between a conductor and an insulator. Contrary to metals, a semiconductor material’s resistance falls as its temperature increases. Semiconductor industry is highly volatile in nature. Major companies emphasize designing and utilization of their expertise to enhance performance of ICs or chipsets. Hence, most of the semiconductor assembly, packaging, and testing related services are outsourced by fabless companies to third party providers also called Outsourced Semiconductor Assembly and Test Service Provider.
The global semiconductor assembly and testing services market was valued for US$ 35,772.8 Mn in 2019.
Market Dynamics- Drivers
Growing requirement for connected and mobile devices namely tablets and smartphones has increased the demand for high-end packaging techniques. Furthermore, increasing demand for digital content has supported growth of home electronic products such as Wi-Fi chipsets and other semiconductor chips. For instance, in 2014, STATS chipPAC (JCET) launched encapsulated Wafer Level Chip Scale Package (eWLCSP) that provides augmented quality and a lower cost fan-in wafer level package for space constrained mobile devices. Moreover, increasing mobility and connectivity capabilities and growing digital content is expected to boost the global semiconductor assembly and testing services market growth during the forecast period.
SATS providers have extended capabilities of offering additional features namely miniaturization, additional functionality, low power consumption, and improved thermal and electrical performance. This aids OSTAS providers to gain competitive advantage over Integrated Design Manufacturers (IDM) in-house testing capabilities. Moreover, increase in the semiconductor content within electronic products is expected provide better functionality and higher levels of performance. Hence, these factors are expected to support the global semiconductor assembly and testing services market growth in the near future.
Asia-Pacific region dominated the global 68.8% market in 2019, followed by North America, Europe and Middle East and Africa and Latin America, respectively.
Source: Coherent Market Insights
Market Dynamics- Restraints
Since SATS providers offer services in all parts of the world, it makes the vulnerable to volatility of various currencies. As a result of this, their consolidated business results and financial condition including the sales volume in foreign currencies, materials costs in foreign currencies, and production costs at overseas manufacturing sites, are influenced if exchange rates change significantly. For instance, due to fluctuations in exchange rates (US$/NT$), Amkor Technologies recorded net foreign exchange losses of NT$ 276.2 Mn (US$ 8.46 Mn), and NT$1,222.0 Mn (US$37.43 Mn) (1 US$ = 32.64 NT$) in 2013 and 2014, respectively.
High-end semiconductor packaging and testing businesses require high capital investment for producing expensive equipment manufactured by a limited number of suppliers. Increasing demand for miniaturization and low thermal ratings have mandated adoption of advanced packaging solutions. However, as the capital required for offering these solutions is high, only few players are able to provide these services, thereby restraining the market growth.
SATS providers are focused on increasing capacity utilization rates by expanding existing capabilities. Leading SATS providers are leveraging advanced packaging and test capabilities to create reasonably quick returns on investments made consumers seeking leading edge technologies. These organizations are also focused on advanced packaging technologies as well as a second wave of consumers who still prefer conventional packaging technologies, in order to fulfil capacity in case leading edge customers transition to newer packaging and test equipment and platforms. For instance, in 2013 and 2014, STATchiPAC Inc. invested US$ 46.4 Mn and US$ 39.2 Mn respectively in R&D activities for improving its packaging solutions. This aided the company to increase its revenue from advanced packaging solutions by 1% from 2013, to account for 47.9% in 2014.
SATS providers are focused on increasing capacity utilization rates by expanding existing capabilities. Any fluctuation in capacity utilization rates can significantly affect gross margins since the cost per unit usually decreases as fixed costs are distributed over a larger number of units. For instance, in November 2013, CORWIL Technology Corporation expanded its wafer thinning services by adding a Disco DAG 810 automatic grinder. It enhanced the company’s offerings by providing 300 mm wafer backgrinding to its current thinning core capabilities.
Source: Coherent Market Insights
Key companies in the market are focused on mergers and acquisitions, in order to gain competitive advantage in the market. For instance, in July 2015, GLOBALFOUNDRIES Inc. acquired IBM’s ‘Microelectronics’ business, which strengthened the company’s workforce by adding experience and expertise in semiconductor development, device expertise, design, and manufacturing. Furthermore, in March 2014, CORWIL Technology Corporation acquired the assets of VIKO Test Labs, a section of Infiniti Solutions. The addition of electrical, environmental, and mechanical test services enhanced CORWIL‘s market position as a provider for both assembly and testing services in the U.S.
Key participants in the market are constantly involved in product development and launching, in order to expand their product portfolio and enhance market presence. For instance, in June 2015, GLOBALFOUNDRIES Inc. developed new digital design flows for Register-transfer Level (RTL) to Graphic Design Database System (GDS) implementation in collaboration with Mentor Graphics, Cadence Design Systems Inc., and Synopsys Inc. Furthermore, in 2013, CORWIL Technology introduced a new FICO MMS-W Molding system. This addition, along with the introduction of the ASM extreme wire bonder, strengthened company’s capability for fine pitch and high density packaging for BGA, QFN, and CSP products.
In global semiconductor assembly and testing services market, by service type segment, the assembly and packaging services sub-segment dominated the global market in 2019, accounting for 80.1% share in terms of value, followed by testing services.
Source: Coherent Market Insights
Key companies operating in the global semiconductor assembly and testing services market are ASE Group, Powertech Technology Inc., Global Foundries Inc., Amkor Technology Inc., CORWIL Technology Corp., Integrated Microelectronics Inc. (Psi Technologies Inc.), STATS chipPAC Ltd. (JCET), Chipbond Technology Corporation, and Silicon Precision Industries Company Ltd.
The semiconductor industry is rapidly and unpredictably changing. Most of the companies in this industry are fabless companies, these companies leverage their resources and use their experience to improve the performance of the semiconductors chips. However, assembly and testing packaging services are outsourced to third parties. Semiconductor assembly and testing services offered to various industries such as communication, automobile sectors and in consumer electronics. A semiconductor material has conductivity value between conductor and insulator. Increasing adoption for mobile and connected services has increased the demand of smartphones and tablets with each internet can be accessed.
The ongoing demand for consumer electronics with the advancement in technology is driving the growth of global semiconductor assembly and testing services market. High development of cell phones and tablets are the potential markets for SATS. Increasing mobility and growing digital content is expected to drive the growth of global semiconductor assembly and testing services market growth during the forecast period. For instance, according to CMI analysis, the global semiconductor sectors total revenue is increased from USD483 billion in 2018 to USD517 billion in 2019.Increasing demand for automotive electronics in the upcoming generation cars built with electronic components, system to enhance car safety, and management system are driving the growth of global semiconductor assembly and testing services market. Rising adoption of latest technologies in navigation, hybrid electric driver, and in LED creates demand for this market.
This report segments the global semiconductor assembly and testing services market on the basis of by service, by application, and region. On the basis of service, global semiconductor assembly testing and services market is segmented into assembly & packaging services and testing services. On the basis packaging solutions, the global semiconductor assembly and testing services market is segmented into Copper Wire and Gold Wire Bonding, Copper Clip, Flip Chip, Wafer Level Packaging and TSV. On the basis application, the global semiconductor assembly and testing services market is segmented into communication, computing & networking, consumer electronics, industrial and automotive electronics. On the basis of region, global semiconductor assembly and testing services market is segmented into North America, Latin America, Europe, Asia pacific, Middle East and Africa.
Key features of the study:
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