Memory manufacturing continues to expand in China: packaging companies benefit from it

The ramp-up of Chinese memory, the growth of flip-chip DRAM and  3D-stacking technologies are opening significant opportunities for packaging players.

“Memory is a critical market in modern data-centric societies, fueled by important megatrends, such as mobility, cloud computing, AI, and the IoT.” asserts Simone Bertolazzi, Ph.D. Senior Market & Technology Analyst, Memory at Yole Intelligence, part of Yole Group. He adds: “All these are propelling the so-called “data-generation explosion” and are shaping a robust growth in memory demand for the next several years”.

NAND and DRAM are the workhorse memory technologies and account together for ~96% of the overall stand-alone memory market revenue.

Walt Coon, VP of NAND and Memory Research within the Semiconductor & Software division at Yole, explains: “By 2026, NAND and DRAM revenues are expected to grow with CAGR_20-26 of 9% (NAND) and 15% (DRAM), to US$93 billion and US$155 billion, respectively.”

The market research and strategy consulting company, Yole, has been researching the memory industry for several years. Analysts use their expertise to deliver an impressive collection of reports and monitors, wholly dedicated to the memory industry, from substrates to components, including packages. Their aim is to describe the ecosystem and analyze the technical and market trends as well as the competitive landscape. The Status of the Memory Industry 2021 and the two Quarterly Market Monitors, DRAM and NAND, are part of this collection.
Furthermore, analysts have combined their technical expertise and knowledge of the semiconductor packaging and memory industry to deliver today the 2021 edition of the Memory Packaging report. This new study analyzes in detail the challenges and opportunities of the memory packaging industry. It presents an overview of the stand-alone memory market and provides an understanding of memory packaging technologies and markets.

The memory packaging market follows the same trends that rule the stand-alone memory market and thus will benefit from the robust long-term growth of memory demand, as well as from the ongoing fab capacity expansion.

Simone Bertolazzi at Yole comments: “We expect that the overall volume of memory wafers will grow from 35.5 million in 2020 to 50 million in 2026 with a 6% CAGR between 2020 and 2026, while the volume of memory packages will have a 5% CAGR in the same period.”
The overall memory packaging market in 2020 is worth US$13.1 billion, which corresponds to about 10% of the stand-alone memory market.
Mike Howard, VP of DRAM and Memory Research within the Semiconductor & Software division at Yole, adds: “In terms of packaging revenues, DRAM is the leading memory technology in 2020 with a 63% share, while wire-bond is the dominant packaging approach being mainly used for mobile applications.”

Unlike the stand-alone memory market that is characterized by strong price volatility, the memory packaging market is more stable since most of the business is carried out internally by IDMs. Yole estimates that approximately 68% of the memory packaging revenue in 2020 was generated by IDM players and the remaining 32% by OSATs.
The rising memory IDMs in China, YMTC and CXMT, are rapidly ramping up their NAND and DRAM wafer production, respectively. These two players do not have well-established internal packaging capabilities and must outsource all their packaging to OSATs. This represents a unique business opportunity for OSATs, especially in China.
According to the Memory Packaging report from Yole, the revenue opportunity for OSATs stemming from the Chinese memory makers can grow from less than US$100 million in 2020 to about US$1.1 billion in 2026. This equates to a CAGR of 55% between 2020 and 2026.
Chinese OSATs will be the first to benefit from this opportunity. The three major players in China, JCET, Tongfu, and HT Tech, are readying to enter the fray.
It is important also to note that two opposing trends are affecting the memory packaging business today: on the one hand, the ramp-up of memory production in China is fueling the growth of revenues for OSATs; on the other hand, IDMs are increasing their internal back-end capacity – particularly for advanced-packaging processes – reducing the outsourcing to OSATs.
In this context, the memory packaging players’ dynamics and strategies need to be carefully analyzed…