Ⅰ Market size and growth engine
The global advanced semiconductor packaging market is experiencing structural growth, reaching $18.09 billion in 2024 and is expected to climb to $29.8 billion by 2031 at a compound annual growth rate (CAGR) of 7.5%. The core driving force of this growth comes from the transformation of the value creation logic of the semiconductor industry from front-end process scaling to back-end integrated innovation. The explosive growth in demand for heterogeneous chip architectures, high-bandwidth memory stacking, ultra-thin fan-out modules, and automotive-grade power packages, coupled with the densification of 5G networks, the surge in demand for cloud AI computing power, and the popularization of electric vehicles, have jointly driven the market size and average selling price (ASP) to rise. Even in the face of the challenges of tight supply of substrates and equipment, the policy emphasis on regional supply chain resilience (e.g., the U.S. CHIPS AND SCIENCE Act, the European Union's CHIPS Act) and the preference for yield-first packaging technologies under the Sustainable Development Goals (SDGs) have enabled the market to grow significantly faster than the semiconductor industry as a whole and become a core driver of performance and profitability in the silicon value chain.
Ⅱ Breakthroughs in key technology trends and application scenarios
1. Flip Chip (FC): The core base of high-performance computing
Flip chip technology enables chip-to-substrate face-down connection through a solder ball array, completely eliminating the traditional long bond wires, reducing inductance, shortening signal latency, and greatly increasing bandwidth, making it the standard solution for AI accelerators, high-end mobile SoCs, and data center GPUs. Its copper pillar structure provides excellent thermal management capabilities to support higher power designs without triggering frequency reduction. With the improvement of the yield of the 3nm/2nm process and the reduction of the fluctuation of the solder ball pitch, flip chip has not only become the preferred choice for a single chip, but also a general technology for heterogeneous integrated chiplets. The multi-chip system-on-chip (MCS) strategy promoted by fabless giants has directly driven the expansion of flip chip production capacity and market revenue growth.
Ⅲ Fan-Out WLP (FO WLP): a space revolution for portable devices
Fan-out technology reconstructs the I/O layout through epoxy resin, enabling ultra-thin packaging without the need for traditional substrates, making it ideal for volume-sensitive scenarios such as wearables, true wireless earbuds, RF front-ends, and mmWave 5G modules. Its ability to batch dice known good chips (KGDs) on reconstructed wafers dramatically reduces test time and improves overall yield. Compared to flip boards, the simpler stacking structure reduces material and assembly costs, allowing advanced packaging to penetrate the mid-range mobile phone and IoT sensor segments. With the commissioning of the Panel-Level Fan-Out production line in China and South Korea, the cost-per-area advantage of this technology will further expand its market coverage.
Ⅳ Automotive electronics: the main battlefield of high-reliability packaging
The electrification and intelligence of automobiles place stringent demands on packaging: it needs to withstand extreme temperature cycling, vibration and humidity for more than 15 years. ADAS domain controllers, radar/lidar modules, battery management ICs, and power inverters are widely used in embedded chips, flip chip scale packages (FC CSPs), and molded array packages (MAPs) to meet AEC Q100 Grade 0 standards. Zonal E/E increases the number of high-speed SerDes links in the vehicle, creating a demand for advanced substrates with a linewidth/spacing of less than 10μm. The introduction of server-class processors for in-vehicle OTA updates has further democratized high-density interposers and chiplet designs. The rise in EV sales (expected to account for more than 50% by 2030) has led leading OSAT manufacturers to sign long-term supply agreements with automotive OEMs to lock in growth over the next five years.
Ⅴ Heterogeneous integration: a breakthrough beyond Moore's Law
When the miniaturization of a single process approaches the physical limit, heterogeneous integration becomes the core path to continue "silicon-based innovation". Through high-density interposers, hybrid bonding, and through-silicon via (TSV) technologies, designers can integrate logic, memory, analog, and photonic chips in a single package, flexibly combining different process nodes to balance performance and cost, and avoid lithography machine limits and yield cliff risks. This architectural freedom is unattainable by traditional bonding technologies, making advanced packaging a necessity for complex systems such as AI chips and HBM stacking.
Figure: Advanced Semiconductor Packaging Market: A New Paradigm for Growth Driven by Heterogeneous Integration
Ⅵ Regional competition pattern and supply chain evolution
-Asia-Pacific: Dominates the market, with Taiwan (ASE and PTI) and South Korea (Samsung Electro-Mechanics, SEMES) having the world's largest OSAT manufacturers and packaging production lines close to wafer fabs, and Chinese mainland narrowing the technology gap through accelerated investment by JCET and Tongfu Microelectronics (such as JCET's 28nm SiP production line).
- North America: Leveraging the collaborative R&D of supercomputing and AI chip vendors (e.g., NVIDIA and AMD), it is leading the way in interposer technology (e.g., CoWoS) and driving demand for high-bandwidth packaging.
-Europe: Relying on the advantages of the automotive industry, Infineon, STMicroelectronics and other companies dominate the automotive-grade high-reliability packaging market, focusing on power electronics and sensor fusion solutions.
-Emerging markets: India and Southeast Asia have benefited from the diversification of supply chains, attracting the transfer of packaging and testing capacity, and have become important nodes for low-end packaging.
Ⅶ Challenges and future prospects
Despite the bright prospects, the industry still needs to break through three major bottlenecks:
1. Supply chain bottlenecks: The production capacity of high-end packaging substrates (such as ABF substrates) is tight, and manufacturers such as Ajinomoto in Japan and Xinxing Electronics in Taiwan have an expansion cycle of up to 2-3 years, which restricts the release of production capacity in the short term.
2. Increasing technical complexity: Process thresholds such as TSV yield control and atomic-level alignment accuracy of hybrid bonding in 3D packaging put forward higher requirements for equipment and materials.
3. Cost pressure: The multi-chip testing and interposer manufacturing required for heterogeneous integration drive up the overall cost, and the complexity needs to be reduced through design-process co-optimization (DFx).
Looking ahead, there will be three major trends in advanced semiconductor packaging:
-Material innovation: The combination of wide bandgap semiconductors such as silicon carbide (SiC) and gallium nitride (GaN) and ceramic substrates (AlN/SiN) has promoted the extension of power packaging to high-temperature and high-frequency scenarios.
- Environmentally-friendly: The proportion of lead-free and recyclable packaging materials will increase, and policies such as the EU's "New Battery Regulation" will drive the popularization of green packaging technology.
- Edge computing convergence: The explosion of 5G edge nodes and AI terminals will give rise to the concept of "package as a system", further blurring the boundary between chips and systems.
