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Asia May Still Be the Hottest Spot for Advanced Packaging By Dean Freeman, Freeman Technology and Market Advisors
(Source: Nvidia)
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When the United States and Europe looked to reshore semiconductor technology, the primary focus was restoring leading-edge manufacturing and creating more resilient supply chains throughout the ecosystem. Eventually, it emerged that nearly all of the leading-edge packaging took place overseas, and there was minimal packaging capability in either the U.S. or Europe. This should not come as a surprise to anyone involved in the industry. Almost as soon as the semiconductor industry started manufacturing chips; test, assembly, and packaging were moved offshore, as it was considered more economical to perform those tasks overseas. This trend led to strong growth of outsourced semiconductor assembly and test service (OSATs) providers and integrated device manufacturer (IDM) packaging across the Asia Pacific (AP) region. The Asia Times wrote that advanced packaging is the next front in the chip wars. If you think that conquest or success in war arises from how much territory, or in this case manufacturing is performed in Asia, then this will be a long-drawn-out battle where the Asia Pacific region already has most of the territory. When the U.S. Department of Commerce (DOC) was preparing the arguments for the CHIPS Act, it was determined that only 3% of the packaging occurred in the U.S., and of that very little advanced packaging when the report was first written. While the U.S. is attempting to recover some of that packaging share, the real hotspot for packaging is in the Asia Pacific Region. The market can be broken up into the semiconductor fabs that also do advanced packaging either for themselves or foundry partners and the OSAT companies, which are essentially the
packaging and test foundries for the majority of the industry. SEMI is tracking over 500 OSAT providers and 170 IDM facilities. As the graph shows the majority of these packaging facilities are in the Asia Pacific region.
Figure 1: Worldwide Assembly and Test Facilities (Source: SEMI) Companies manufacturing chips, both IDM and foundry, provide a considerable amount of packaging services in the AP region. The foundry operations of Samsung and TSMC have significant packaging capacity and are adding more as demand for chiplets to support AI capacity for their partners. Chiplets are also finding their way into phones, automotive, and PCs, which is increasing the demand for chiplet capacity to which the OSATs are responding in partnership with fabs and foundries. Samsung, Hynix, and Micron perform most of their memory packaging in the AP region. Samsung and Hynix are packaging mostly in Korea with some manufacturing occurring in China. Micron has facilities in Singapore, Malaysia, China, and Taiwan. Micron is also expanding to India with a new facility expected to open in 2025. Intel has packaging and assembly facilities in Malaysia, China, and Vietnam in addition to its U.S. efforts .
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