The Global Outsourced Semiconductor Assembly and Test Services (OSAT) Market was valued at USD 32. 64 billion in 2020, and it is projected to be worth USD 56. 28 billion by 2026, registering a CAGR of 8.
New York, July 20, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Outsourced Semiconductor Assembly and Test Services (OSAT) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021-2026)" - https://www.reportlinker.com/p06106039/?utm_source=GNW
20% during the forecast period of 2021-2026. OSAT remains the essential pillar between the widening technology gap of front-end and back-end scaling. Especially with the growing adoption of advanced packaging, OSATs vendors innovation and supply chain positions are crucial to on-going system-level performance increases.
- Although the global automotive industry is witnessing recession and fluctuation in the demand in recent years, it is still one of the primary drivers and opportunities for semiconductor and OSAT vendors. The increasing number of semiconductor products per vehicle and trends like autonomous and electric vehicles are becoming the primary drivers for semiconductor manufacturers and OSAT vendors. For instance, to achieve level 5 autonomy or increasing hybrid efficiency, a centralized automotive-specific SoC is needed. The centralized automotive semiconductor-based solution still relies on individual semiconductor components and leads to innovative work from both the established automotive firms and the new semiconductor fabless and OSAT companies targeting the automotive market.
- According to the Semiconductor Industry Association (SIA), global semiconductor industry sales were USD 43.6 billion in the month of May 2021, an increase of 26.2% over the May 2020 total of USD 4.6 billion and 4.1% more than the April 2021 total of USD 41.9 billion. Further, the sales of semiconductors in April 2021, was an increase of 1.9% from the March 2021 at USD 41.0 billion and an increase of 21.7% when compared to April 2020 at USD 34.4 billion. Last year, that is; 2020, as per the World Semiconductor Trade Statistics (WSTS), the semiconductor industry was expected to grow long-term, with the COVID-19 impact being a short-term lag for the market studied.?
- The outbreak of the COVID-19 across the world has significantly disrupted the supply chain and production of the studied market in the initial phase of 2020. For circuit and chipmakers, the impact was more severe. Due to labor shortages, many of the package and testing plants in the Asia-Pacific region reduced or even suspended operations. This also created a bottleneck for companies that depend on such back-end package and testing capacity.? However, according to the Semiconductor Industry Association, after the first quarter of 2020, the semiconductor industry started recovery.
- MEMS technologies have enabled miniaturized, cost-effective, and reliable sensors, some of which can withstand high temperatures and harsh environments, expanding the scope of semiconductor devices. Such diversity of MEMS devices and the different technologies involved in their manufacture have led to a complex but sustainable supply chain, from design to testing, thereby, favoring the OSAT vendors.
- Vertical integration is one of the significant concerns of OSAT players in the current market scenario. Compared to OSATs, foundries are more flexible for expansion and have a high flow of revenues that support their expansion toward assembly and testing operations, especially in the case of advanced packaging techniques, such as the wafer-level packaging. In recent years, foundries and integrated device manufacturers (IDMs) have started to include advanced packaging products as part of their core competencies. This deeply affects OSAT vendors as many of these are giant players with high expenditure and control the front-end devices. Continuation of this trend could limit the scope of OSAT vendors and negatively impact their growth.
Key Market Trends
Automotive Sector is Expected to Grow Significantly
- Automotive applications are one of the fastest-growing sources of demand for the OSAT market. As the complexity of automotive chips is growing with the advent of electric cars, autonomous vehicles, and ADAS systems, the complexity of the automotive chip packaging is also increasing rapidly. In-cabin applications such as infotainment controllers and advanced driver-assistance systems (ADAS) have stringent mission-critical test requirements over wide operating temperature ranges, necessitating the need for OSAT vendors to step in.
- The COVID-19 pandemic has disrupted the automotive industry by affecting the production hubs and supply chains. The automotive supply chain has been heavily impacted by the outbreak, as countries like China, Japan, and South Korea, account for a majority share of the supply chain in the industry. For instance, most of the North American assembly plants depend on China for some auto parts, such as wheels, brake and steering components, and electronics. The disruption caused by the pandemic is expected to act as a major hindrance in maintaining productivity in these plants.
- According to Edward Fontanilla, deputy director for technology strategy at Jiangsu Changjiang Electronics Technology Co. Ltd (JCET), the total available market for OEMs in automotive is expected to grow at CAGR of 13.4%, reaching USD 170 billion by 2022. Such increasing demand from the automotive market encourages many OSAT players to adapt to the automotive industry’s requirements by getting required certifications and ensuring zero defect products. It is estimated that most of the chips sold for automotive applicators are installed for advanced driver-assistance systems (ADAS), followed by infotainment systems.
- Automotive chip packaging is a complex process and profoundly different from standard packaging. A failure as small as one part per million at the component level will translate to a 1% defect rate when the product is installed in the vehicle. Moreover, automakers are unlikely to contact a new supplier, as it takes about three to six months, to qualify chips from a new factory.
- The OSATs need to ensure there are no defects in the end product. However, this factor is hindering the growth of small OSATs and new entrants, as the production establishments require packaging equipment to be dedicated to these applications and generally kept separate from other packaging lines, which involves a lot of capital.
United States is Expected to Hold a Significant Market Share
- United States is one of the most significant markets for the OSAT industry. High investments, technological advancement, and innovation of new applications are some of the major factors driving the country’s OSAT market growth. Though China dominates the global OSAT and semiconductor market, but United States has a significant portion of the technology patents which places the country in a strong position. Its healthy innovation rate in the OSAT market has also attracted several Asian vendors in the past.
- The increase in wired and wireless networking equipment leads to the growth of the market for OSATs in the country. According to Cisco, by 2023, the country is expected to have the highest average per capita devices and connections. The devices include smartphones, tablets, PCs, and others. In addition, according to the Consumer Technology Association (CTA), the smart home devices shipments increased from 30.6 million in 2019 to 35.6 million in 2020. According to Amcor technology, a prominent player in the region, the growth of smart home devices creates a growth perspective for advanced packaging.
- Moreover, the increasing demand for electric vehicles (EVs) and the growing trend in automotive driver assistant systems (ADAS) in the country are significantly contributing to the increase in demand for semiconductor packaging. The success of many of the traditional automakers, such as Ford and General Motors, has increased their focus to adapt to the new transition to electric vehicles, which is anticipated to increase the demand for semiconductor devices. According to International Energy Agency (IEA), the country’s plug-in electric light vehicles grew from 331,000 units in 2019 to 340,000 units in 2020.
- Furthermore, the growth in 5G and HPC also contributes to developing the market for OSATs in the country. According to CloudScene, in 2021, the United States has the maximum number of data centers globally (2,670), followed by the United Kingdom, Germany, and other countries. Many data centers and investments in cloud infrastructure in the country are developing the need for OSATs services for providing advanced packaged semiconductors.
- Once, Singapore-based chipmaker Broadcom attempted to acquire US firm Qualcomm that amounted to over USD 100 billion deal, the United States administration vetoed the deal citing ties to Chinese firms. Besides Qualcomm, the government cut off a planned acquisition of Oregon-based Lattice Semiconductor by a little-known private equity firm with links to the Chinese government. The impact of the US-China trade war on US fab equipment vendors is likely to be minimal due to US fab equipment vendors’ leadership capabilities. It’s challenging to buy competitive equipment from other country sources.
OSAT Market is highly competitive and consists of several major players. In terms of market share, a few of the major players currently dominate the market, such as ACE, Amkor, and JCET.
- January 2021 - UTAC Holdings Ltd. purchased the Singapore wafer bumping assets from Powertech Technology (Singapore) Pte. Ltd. Completion of this transaction enabled the company to provide advanced 300mm wafer bumping capabilities and technology. It complemented the company’s wafer probe and back-end WLCSP capabilities in the Singapore.
- October 2020 - ASE, MOE, and NKUST, jointly established an onsite campus semiconductor assembly and test (SAT) talent development facility to develop an industry-based training mechanism and suitable environment. The company has contributed several SAT equipment’s, including IC testers, probers, thermal shock systems, and workbenches, to create a factory model similar to the ASE manufacturing environment.
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