According to the latest report from Global Market Insights, the advanced packaging market is expected to exceed US$40 billion by 2026, and the compound annual growth rate from 2020 to 2026 will reach 8%.
Today’s expanding AI market is driving the growth of the advanced packaging industry. AI chipsets require faster cores, smaller form factors, and high energy efficiency, driving the advanced packaging market. Some of the top semiconductor companies are also making strategic decisions to introduce innovative advanced packaging design technologies. For example, in August 2020, Synopsys announced a collaboration with TSMC on the advanced packaging side. TSMC will use advanced packaging solutions including its compilers to provide a validated design flow for advanced designs such as chip-on-chip (CoWoS) and integrated fan-out (InFO).
The popularity of 5G technology is also increasing the demand in the advanced packaging market. 5G chipsets rely more on advanced packaging technology to achieve high performance, small size and low power consumption. According to the GSM Association’s 2020 Mobile Economy Report, there will be more than 1.8 billion 5G connections worldwide by 2025, most of which will come from Asia and North America. This will greatly drive the demand for advanced packaging of 5G chipsets by IDMs and foundries.
The continued advancement of process nodes and the development of 2.5D/3D packaging have increased production costs, and the COVID-19 outbreak has also put most chipmakers under some pressure in sourcing raw materials and maintaining test operations. In addition, some fab facilities are closed due to some policy-imposed lockdowns, and fab operators and engineers are in short supply. Due to the decline in production capacity in industries such as consumer electronics and automotive, the demand for advanced packaging from IDMs and foundries has declined.
In terms of market segments, the flip-chip type accounted for more than 65% of the market share in 2019, and is expected to grow at a compound annual growth rate of 5% from 2020 to 2026. Compact semiconductor components for high-performance applications such as automotive, aerospace, and defense will drive market demand. The small size and high input/output density of advanced flip-chip packaging technology have led to increased adoption by multiple foundries and IDMs. For example, Infineon announced in January 2020 that due to the high quality requirements of the automotive market, flip-chip packaging has been set as a new production process technology.
In terms of application market, consumer electronics accounted for 75% of the advanced packaging market in 2019 and is expected to increase by 7% by 2026. Mainly thanks to the market’s pursuit of compact Electronic devices. Advanced packaging technologies help reduce size, increase chip connectivity, improve reliability, and provide multi-function integration, which are evident in smartphones and smart watches.
From a regional perspective, the Asia-Pacific advanced packaging market had a revenue share of more than 70% in 2019. Rising production capacity for semiconductor components and consumer electronics equipment in China, Taiwan, and South Korea is driving high-share growth in these regions. In addition, major foundries in these regions, such as Global Foundries, TSMC and UMC, are also expanding opportunities for advanced advanced packaging at both the technology and market levels.