TSMC introduced “Wafer Manufacturing 2.0” in July 2024, integrating packaging, testing, and photomask production into its portfolio. The move highlights a dramatic shift in the advanced packaging supply chain, driven by new investment from OSAT providers, IDMs and new entrants disrupting traditional roles.
Industry players adapt to new conditions
OSAT companies are ramping up their testing capabilities and testing professionals are challenging packaging. Wafer foundries including TSMC are entering the packaging space and challenging OSAT’s dominance. TSMC’s model of combining front-end wafer production with advanced packaging is setting new industry benchmarks. Industry leaders Samsung Electronics and Intel are consolidating packaging to strengthen their foundry and IDM strategies, respectively.
Changes in market dynamics due to technological advances
This convergence is redefining market competition. While wafer foundries leverage their 2.5D/3D packaging expertise to streamline processes, traditional OSAT players face challenges in maintaining their edge. Yole Intelligence predicts that 2.5D/3D packaging will drive the fastest growth over the next five years, with global advanced packaging penetration reaching 49% by 2024. China’s penetration rate is predicted to be 40%, highlighting its lag behind global standards.
Chinese manufacturers step up investment
Chinese companies such as JCET, Tongfu Microelectronics, and Huatian Technology are progressing rapidly. Huatian’s Pangu semiconductor project will invest 3 billion yuan (US$669 million), with production planned by early 2025 and an annual revenue of 900 million yuan. Tongfu Microelectronics’ advanced packaging efforts include a 7.5 billion yuan facility, which it aims to be fully operational by 2029.
Industry expansion and future prospects
Meanwhile, JCET is expanding its automotive-grade packaging capabilities in Shanghai after acquiring SanDisk Semiconductor. Yongxi Silicon promotes research and development and industrialization of heterogeneous packaging, focusing on fan-out and 2.5D/3D technology to enhance mass production.
The rapid increase in demand for AI computing power and the global shortage of CoWoS capacity presents an opportunity for growth. As Chinese companies hone their advanced packaging technologies, they are poised to take on global players and fill gaps in this evolving market.
