SEMICONDUCTOR ASSEMBLY AND TESTING SERVICES MARKET ANALYSIS

The global semiconductor assembly and testing services market is estimated at US$ 33.42 Billion in 2023, and is projected to reach US$ 48.81 Billion by 2030, exhibiting a CAGR of 5.6% over the forecast period (2023-2030). 

Semiconductors are a special type of material that has a value of conductivity between a conductor and an insulator. Contrary to metals, a semiconductor material’s resistance falls as its temperature increases. The semiconductor industry is highly volatile in nature. Major companies emphasize design and utilization of their expertise to enhance the performance of integrated circuits 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 providers.

The Asia Pacific region dominated the global semiconductor assembly and testing services market in 2022, followed by North America, Europe, Latin America, Middle East and Africa.

Figure 1: Global Semiconductor Assembly and Testing Services Market Share (%), By Region, 2022

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Asia Pacific is in the best position to lead the market due to the existence of leading players across China, Taiwan, Japan, India, and other countries. In addition, in 2021, the Semiconductor Industry Association (SIA) stated that 80.0% of semiconductor assembly and test operations and foundries are concentrated in Asia, fueling market growth. The growing automotive industry is one of the key factor that drive the semiconductor assembly and testing services market growth across the region. China is one of the biggest semiconductor markets across the globe. In July 2021, the Semiconductor Industry Association (SIA) stated that China produces 36.0% of the world’s electronic devices including computers, cloud services, and others, and it is the second largest final consumption market after only the U.S. for electronic devices embedded with semiconductors.

The consumer electronics segment is expected to drive the global semiconductor assembly and testing services market growth during the forecast period.

Among application, the consumer electronics segment is expected to hold a major market share and grow at a higher CAGR over the forecast period. It is attributed to the growing consumption of smartphones, tablets, and smart television sets, as well as the adoption of 5G technologies and others. Semiconductor assembly and test services play a significant role in the operational working of these devices, as they are being tested before usage. Additionally, portable electronics, smart homes, and other products are witnessing aggressive demand across the countries such as China, India and others.

Figure 2: Global Semiconductor Assembly and Testing Services Market Share (%), By Application, 2022

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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.

Recent Developments:

In May 2021, Deca, an industry-leading pure-play technology provider for advanced semiconductor packaging, announced the introduction of its new (Adaptive Patterning Design Kit) methodology. The solution is the result of Deca’s collaboration with Advanced Semiconductor Engineering, Inc. (ASE), semiconductor assembling and test manufacturing services and Siemens Digital Industries Software.

In October 2020, ASE, provider of semiconductor manufacturing services, Ministry of Education (MOE), and National Kaohsiung University of Science and Technology (NKUST)  together established an onsite campus semiconductor assembly and test facility to develop world-class high-tech industry graduates.

Market Driver:

Capabilities of high-quality SATS providers to let OEMs and ODMs to focus on their core business

Semiconductor process technology is migrating to larger wafers and smaller feature sizes. As a result of this, building state-of-the-art wafer fabrication factories has become significantly expensive, costing 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 Original Design Manufacturer (ODMs) in focusing on their core businesses and increasing their 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.

Market Restraint:

Constant fluctuations in order levels and service fees

The majority of consumers of SATS providers are part of the semiconductor industry. Constant fluctuations in order levels and service fees have 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 a downturn in the near future would decrease the demand for these services.

Market Opportunity:

Growing adoption of safety systems in automobile industry

Penetration of semiconductor devices in well-established end products such as automotive systems has increased, owing to the rising utilization 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 capitalize on untapped market potential.

Impact of COVID-19:

Due to the COVID-19 outbreak, the market has seen a halt in production and disruptions throughout the supply chain, which has led to a delayed expansion of manufacturing output across important manufacturing hubs. All chip manufacturing activities across several nations have been impacted by the restrictions that the governments have put in place. As a result of the worldwide lockdown, which at first decreased demand for cars and personal transportation, the pandemic was a major factor in the start of the 2020 chip shortage for the automotive industry. Moreover, the pandemic had considerably increased semiconductor demand in the consumer, telecommunications, and personal computer sectors due to accelerating digital transformation and the adoption of remote work, remote study, movie streaming, and e-commerce technologies globally. Early in 2020, a number of manufacturers reduced their production capacity as a result of the worsening semiconductor crisis and decreasing demand for the global semiconductor assembly and testing services market.

*Definition: A semiconductor chip is an electric circuit with many components, such as transistors and wiring, formed on a semiconductor wafer. An electronic device comprising numerous of these components is called “integrated circuit (IC)”. In the assembly area, during the production of semiconductors and integrated circuits, excessive moisture adversely affects the bonding process and increases defects. Photosensitive polymer compounds called photoresists are used to mask circuit lines for etching process.