Status of

Status of the Advanced Packaging Industry 2026

Jun 2026

AI surges, non-AI grows: a two-speed advanced packaging market takes shape

YINTR26582

Scope

Depth analysis

System
Module
Sub-module
IC/Device

Technology

2.5D/3D
Fan Out
System in package
Chiplets
Hybrid bonding
CoWoS/CoWoP
EMIB

The Advanced Packaging is under supply pressure as the demand is exceeding the current capacity while its expansion takes time. The AP is omni present in all markets from AI oriented with all levels to non-AI and low-end markets.
The AP industry potential and value are attracting new players more and more, which makes it the great entry to the semiconductor industry to gain profit faster, in the mid and long term. The boundaries between the different business models are dissolving due the advanced packaging various axes.
The key challenges and questions related to performance and power are now addressed first directly by the AP players. How to increase the system performance ? How to feed the system and cool it down ? How to control the cost and shift value from FE ? All are being answered by this report.

What's new

Deeper overview of the power delivery from grid to package
The advanced packaging is now organic, inorganic substrates based.
Substrateless advanced packaging are emerging.
Focus on the India Packaging ecosystem
AP, legacy packaging, memory packaging and IC substrate capacity buildout and timelines.
How the Advanced Packaging is handling the CPO integration and becoming closer.
New teardowns.

Product objectives

The “Status of the Advanced Packaging Industry” is a yearly overview report.

The objectives of the report are:

To provide an overview of the Advanced Packaging market
- Drivers and dynamics
- Future applications
- Disruptions and opportunities
To present our analysis of the supply chain
- Overview of production by player (IDM, OSAT, foundry)
- Shifting business models
- Financial analysis of TOP 30 OSATs
To discuss technology trends and forecasts
- Revenue, wafer, and unit forecasts by platform
- Future development by platform
- Impact of front-end scaling
- Scaling and functional roadmaps

Advanced Packaging Exceeds $100B as the New Center of Semiconductor Value

AP has moved from a backend process into the central capacity constraint of the AI compute cycle. The market story is about how packaging has become the layer where AI hardware output is physically gated. In the previous semiconductor cycle, the binding constraint was usually wafer capacity, leading FE node access, or lithography. In this cycle, the constraint has shifted to the ability to integrate logic, HBM, IC substrates, interposers, bridges, RDL, thermal solutions, and test into one high yield system. This is the key market inflection, the package has become the unit of compute supply.

The most important market signal is TSMC’s AP demand expanding at high CAGR while CoWoS capacity remains effectively reserved by Nvidia, hyperscalers, and leading ASIC developers. This turns CoWoS capacity into a strategic asset. AI accelerator demand is no longer gated only by whether Nvidia, AMD, Broadcom, Google, Amazon, or Microsoft can design chips, nor only by whether TSMC or Samsung can manufacture wafers. It is gated by whether enough 2.5D and HBM capable package capacity exists to assemble those chips into systems. This is the reason behind expanding capacity, and advanced packaging exposure of OSATs, and FOPLP adoption.

The market is entering a higher capex phase. The market is also becoming more bifurcated. AI/HPC, HBM, custom ASICs, AI servers, CPO, and high-end substrates are in a shortage environment. Meanwhile, mobile, consumer, and some automotive, industrial segments remain more cyclical and price-sensitive. This creates a two-speed backend market. Legacy OSAT volume is not the same as advanced packaging value. The winners are not simply the companies with the most assembly capacity, but those with scarce capability in 2.5D, hybrid bonding, HBM test, fan-out RDL, large-body substrate handling, KGD, CPO attach, and high-power SLT/burn-in.

The Least Backend Layers Now Control the Most Strategic Supply Chain

The supply chain is increasingly controlled by critical bottlenecks such as TSMC CoWoS capacity, raw materials for IC substrates , Nittobo’s T-Glass, HBM packaging, and advanced testing. Taiwan, Japan, and Korea dominate key segments, while the US and China are investing heavily to build domestic capabilities. Also, India invested in more than 6 OSATs entering the legacy packaging before shifting to the advanced packaging playground. A total of almost $ 17B CapEx in Advanced packaging reflect the contribution of the IDMs, foundries and OSATs in Advanced packaging, a value expected to increase even more. As a result, advanced packaging has become a strategic, capital-intensive, and geopolitically important layer that determines how much AI computing capacity can actually reach the market.

Beyond the Transistor – System Scaling Moves Into Interconnect, Bonding, and Test

The advanced packaging technology roadmap is defined by three simultaneous integration vectors: scaling outward through 2.5D/3D and FO, scaling upward through 3D stacking and hybrid bonding, and moving off copper through co-packaged optics. These are not independent technology trends. They are different responses to the same system problem: AI hardware needs more bandwidth, more memory proximity, more chiplet flexibility, lower latency, lower energy per bit, better power delivery, and manageable thermals. The package is now the architecture where those trade-offs are resolved.

2.5D/3D remains the core technology of the AI accelerator era. CoWoS integration is the reference platform because it solves the immediate need to place large logic dies and multiple HBM stacks on a high-bandwidth interconnect substrate. Silicon interposers provide dense routing, uniform HBM access, and high performance, but they also create cost, reticle, area, and capacity constraints. This is why the technology debate is moving from “whether 2.5D is needed” to “which 2.5D architecture scales best.” TSMC’s CoWoS remains dominant, ASE’s FOCoS and Amkor’s 2.5D/HDFO offerings are expanding, and Intel’s EMIB/EMIB-T is emerging as the most credible bridge-based alternative. The key technical shift is selective silicon: use expensive silicon density where bandwidth is load-bearing, but avoid building a full large-area silicon interposer where organic, bridge, or fan-out routing can do the job.