The Chinese advanced packaging ecosystem: what will happen next years…

In 2015, more than US$1 billion was invested in China’s advanced packaging ecosystem, announces Yole Développement (Yole) in its report Status and Prospects for the Advanced Packaging Industry. And right now, more than 100 companies are involved in assembly & packaging activities in China. Almost all key global IDMs and OSATs  have a packaging facility in China to take advantage of low costs.

But what are the strategies of these companies? How do they ensure their market positioning and their development in the Chinese advanced packaging industry? Is there a specific approach according to their business model? …

“Global OSATs are working on their strategies to thwart challenges and exploit opportunities in China’s advanced packaging market”, details for example, Santosh Kumar, Senior, Technology & Market Analyst, Advanced Packaging & Semiconductor Manufacturing at Yole. And in parallel, Chinese players may acquire or invest in others with complimentary packaging technology/services/customers.

Status and Prospects for the Advanced Packaging Industry in China report presents the Chinese semiconductor market outlook as well as the advanced packaging ecosystem in China. This analysis details the global and local players as well as the Chinese backend equipment & materials suppliers. It also covers supply chain evolution, OSAT strategy and business opportunities for local and global players in China’s advanced packaging space… Some results will be presented by Santosh Kumar at the China International Semiconductor Executive Summit taking place from November 1 to 2, 2016 in Shanghai, China. More info.

The advanced packaging market in China is reaching about US$2.5 billion in 2016. And Yole’s analysts expect an impressive 16% CAGR  between 2016 and 2020, scoring US$4.6 billion at the end of this period. Under this imposing growth, advanced packaging companies are deploying complex strategies to ensure their business and develop their activities. For example, some companies collaborate with local IC design & foundries and invest in R&D and manufacturing capacity in China. Others invest in Chinese capital.

Technical innovation is also a priority for all China-based companies. Companies are investing a lot to secure important R&D activities and develop disruptive technologies. In parallel, advanced packaging players protect their IP and company’s core value.

From a human resources point of view, they reserve key employees through incentives and educate employees to not release confidential information.

China’s advanced packaging industry took a giant leap when JCET acquired STATSChipPAC in 2015 for US$780 million. This deal propelled JCET into 4th place amongst OSAT companies. “JCET-STATS ChipPAC is clearly the game changer in China AP ecosystem,” comments Santosh Kumar from Yole. And he adds: “JCET-STATS ChipPAC results in operational, revenue & capex synergy”. Other notable acquisitions are:

  •  Huatian acquiring FCI
  •  Nantong Fujitsu acquiring AMD backend facilities in China and Malaysia.

While Chinese OSATs and foundries are rapidly acquiring advanced packaging capabilities, the local equipment and materials supply chains are still far behind compared to global players, who still dominate the advanced packaging equipment and materials space.

Will this remain true over the next five years? Do global suppliers see China’s advanced packaging market as an opportunity or a threat from local supplier)? In Yole’s report’s equipment/materials section, the advanced packaging team addresses these questions as well as other issues.

Yole has been invited at the China International Semiconductor Executive Summit from Nov. 1-2, in Shanghai, China. During two days, executives from the leading advanced packaging companies will debate about the latest technology and market trends. Yole is part of the agenda with a dedicated presentation lead by Santosh Kumar and entitled: “What’s happening in advanced semiconductor packaging ecosystem: Market & technology trends”. Full program & registration.

A full description of Yole’s advanced packaging report is available on, advanced packaging reports section.