TSMC introduced "Wafer Manufacturing 2.0" in July 2024, integrating packaging, testing, and photomask production into its portfolio. This move underscores a seismic shift in the advanced packaging supply chain, driven by fresh investments from OSAT providers, IDMs, and new entrants that are disrupting traditional roles.
Industry players adapt to new landscape
OSAT firms are bolstering testing capabilities while testing specialists venture into packaging. Wafer foundries, including TSMC, are entering the packaging domain, challenging OSAT dominance. TSMC's model, combining front-end wafer production with advanced packaging, is setting a new industry benchmark. Industry leaders Samsung Electronics and Intel are integrating packaging to enhance their foundry and IDM strategies, respectively.
Market dynamics shift amid technological advances
This convergence is redefining market competition. While wafer foundries leverage their expertise in 2.5D/3D packaging to streamline processes, traditional OSAT players face challenges in maintaining their edge. Yole Intelligence projects that 2.5D/3D packaging will drive the fastest growth over the next five years, with global advanced packaging penetration expected to hit 49% by 2024. China's penetration rate is forecasted at 40%, highlighting a lag behind global standards.
Chinese manufacturers ramp up investments
Chinese firms like JCET, Tongfu Microelectronics, and Huatian Technology are rapidly advancing. Huatian's Pangu Semiconductor project, with a CNY3 billion (US$669 million) investment, plans production by early 2025, targeting annual revenue of CNY900 million. Tongfu Microelectronics' advanced packaging initiatives, including a CNY7.5 billion facility, aim for full-scale operations by 2029.
Industry expansion and future outlook
Meanwhile, JCET is scaling up automotive-grade packaging capabilities in Shanghai after acquiring Sandisk Semiconductor. Yongxi Silicon is advancing heterogeneous packaging R&D and industrialization, focusing on fan-out and 2.5D/3D technologies to enhance mass production.
The surging demand for AI computing power and a global shortage of CoWoS capacity present growth opportunities. As Chinese firms refine advanced packaging technologies, they are poised to challenge global players and bridge the gap in this evolving market.
