Outsourced Semiconductor Assembly and Test Services Market Size:

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The Outsourced Semiconductor Assembly and Test Services Market Size was valued at USD 40.10 Billion in 2023 and is expected to reach USD 77.90 Billion by 2032, growing at a CAGR of 7.67% over the forecast period 2024-2032.

The outsourced semiconductor assembly and test services (OSAT) market has witnessed significant growth in recent years, driven by the increasing complexity of semiconductor devices and the demand for cost-effective solutions in the semiconductor manufacturing process. In 2022, the global OSAT (Outsourced Semiconductor Assembly and Testing) market was growing by 5.1% CAGR due to rising demand for AI, HPC, 5G, automotive, and IoT applications. Taiwan, China, and the US accounted for 80.1% of the market, with Taiwan's share dropping 2.5% to 49.1% and China’s rising to 26.3%, driven by local expansion and government support. Based in the US, Amkor saw a 1.7% increase in market share, reaching 18.8%, due to strong orders from the automotive and 5G sectors. Vendors in South Korea, Japan, and Southeast Asia held the remaining 5.8%.

As the electronics industry continues to evolve, the OSAT sector plays a crucial role in producing semiconductor chips, offering specialized assembly and testing services that are essential for ensuring the reliability and performance of electronic devices. In 2023, the semiconductor sector remains in the destocking phase because of the sharp decrease in consumer electronics demand and a decline in non-AI cloud server demand. Many OSAT plants had a capacity utilization of 65% in the first half of the year (1H23) and were projected to increase to 75% in 2H23 due to a moderate demand recovery post-stock adjustment. Urgent orders for advanced packaging could potentially boost it to 80%, still below 85% in 2022. The global semiconductor OSAT market is projected to decrease by 13.3% in 2023 compared to the previous year. Yet, the semiconductor industry's slow recovery, along with the presence of vendors in advanced packaging and heterogeneous integration, will lead to a resurgence in the overall growth of the OSAT industry in 2024.

OSAT providers offer a comprehensive range of services, including packaging, assembly, and testing of semiconductor components. The need for advanced packaging technologies has risen due to the miniaturization of electronic devices and the growing demand for high-performance semiconductors in various applications such as consumer electronics, automotive, telecommunications, and industrial automation. The shift towards smaller, more efficient devices has led to the adoption of innovative packaging solutions, including 3D packaging, system-in-package (SiP), and flip-chip technology. These advancements not only enhance the functionality of semiconductor devices but also improve thermal management and signal integrity.

Outsourced Semiconductor Assembly and Test Services Market Dynamics

Drivers

• The surge in consumer electronics fuels demand for advanced semiconductor devices and subcontracted assembly services.

The rising popularity of consumer electronics like smartphones, tablets, laptops, and wearables is driving the need for semiconductor devices. Consumers are constantly shifting towards newer technology and higher performance; thus manufacturers need to quickly innovate to create new chips that can meet these demands. When semiconductor companies opt to delegate assembly and testing services, they can increase production to fulfill growing demands without compromising on quality or efficiency. Not just high-end devices, but also mid-range and budget devices are becoming more advanced as the demand for advanced semiconductors grows. Additionally, the demand for semiconductors rises with each IoT device available, leading to greater chances for subcontracted assembly and testing.

• Global semiconductor market expansion through strategic outsourcing of assembly and testing services.

With the semiconductor market becoming more global, companies are seeking to broaden their operations outside of their home countries. Outsourcing assembly and testing services can help with this growth by allowing entry into different markets and customer pools without requiring a large financial investment in new facilities. Service providers frequently have established connections in different areas, helping semiconductor companies enter new markets and adjust to local needs more easily. Additionally, trade policies and tariffs, among other geopolitical factors, are leading companies to diversify their supply chains, with outsourcing becoming a desirable tactic for maintaining resilience and adaptability in a changing market landscape.

Restraints

• Ensuring Quality Control in Outsourced Assembly and Testing Services for Semiconductor Products.

Quality control issues may arise when the service provider does not follow strict quality standards in outsourcing assembly and testing services. Ensuring uniform quality across various sites may be difficult, resulting in potential issues such as flaws, product recalls, and harm to the outsourcing company's reputation. This issue is especially important for semiconductor products, as small defects can greatly impact performance and safety. Hence, businesses need to guarantee strict processes for selecting and monitoring suppliers in order to reduce these risks.

Outsourced Semiconductor Assembly and Test Services Market Segmentation

by Type

The assembly & packaging sector led the market with 85% market share in 2023. This portion leads the market because of the rising need for sophisticated packaging options, fueled by the increasing intricacy of semiconductor designs and the requirement for smaller sizes in electronics. Amkor Technology and STATS ChipPAC are major players in this industry, offering advanced assembly solutions designed for high-performance purposes. Their expertise in providing cutting-edge packaging technologies like System-in-Package (SiP) and 3D packaging is essential for catering to industries like consumer electronics, automotive, and telecommunications.

The testing sector is accounted to become the fastest-growing segment during 2024-2032, because of the increasing demand for quality control and dependability in semiconductor devices. With the progression of semiconductor technologies, thorough testing procedures are crucial for verifying functionality, performance, and adherence to industry regulations. This part includes testing of wafers, testing during assembly, and final testing services.

by Application

The telecommunication sector held a major market share of over 36% in 2023 and led the market, fueled by the growing need for cutting-edge communication technologies. Telecommunications companies are constantly investing in high-performance semiconductor components due to the rapid expansion of 5G networks and the increasing number of Internet of Things (IoT) devices. Qualcomm and Broadcom depend greatly on OSAT services for their semiconductor products, which are essential for telecommunication applications such as base stations, routers, and mobile devices.

The consumer electronics sector is the fastest-growing segment with a rapid CAGR during 2024-2032. The increase in popularity of smart devices like smartphones, tablets, wearables, and smart home appliances is driving this expansion. Manufacturers look to OSAT providers for quick innovation and efficient semiconductor packaging and testing solutions to stay in step with consumer preferences. This pattern is shown by companies such as Apple and Samsung, who rely on OSAT services to keep their innovative products competitive in the market.

Outsourced Semiconductor Assembly and Test Services Market Regional Analysis

The APAC region led the market in 2023 with a 55% market share, holding a significant portion because of top semiconductor manufacturers and assembly houses. Nations such as China, Taiwan, and South Korea are leading the way in semiconductor manufacturing, drawing in substantial investments in OSAT services. Siliconware Precision Industries Co., Ltd. is among the well-known companies based in the area. (SPIL) and ASE Technology Holding Co., Ltd. provides extensive packaging and testing solutions to customers worldwide.

North America is becoming the quickest-growing region during 2024-2032 in the market, due to strong demand for advanced semiconductor solutions in industries like automotive, consumer electronics, and telecommunications. The growing intricacy of semiconductor devices requires specialized assembly and testing services, which has resulted in a rise in outsourcing. Amkor Technology and Jabil, among other major companies, are making substantial investments in new assembly technologies and broadening their service offerings to meet the growing demands of semiconductor manufacturers.

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Key Players

The major key players in the Outsourced Semiconductor Assembly and Test Services Market are:

• ASE Technology Holding Co., Ltd. (Wafer Level Packaging, Advanced Packaging Solutions)

• Amkor Technology, Inc. (Flip Chip Technology, System in Package (SiP))

• Powertech Technology Inc. (Memory Packaging, 3D IC Packaging)

• JCET Group Co., Ltd. (Bumping Services, Flip Chip Packaging)

• ChipMOS Technologies Inc. (Mixed-Signal Testing, Advanced Packaging)

• Tianshui Huatian Technology Co., Ltd. (Wire Bonding Services, Chip-on-Board (COB) Packaging)

• Tongfu Microelectronics Co., Ltd. (Chip Packaging Services, Wafer Level Test)

• King Yuan Electronics Co., Ltd. (Plastic Package, High Density Packaging)

• UTAC Holdings Ltd. (Test and Assembly Services, System in Package (SiP))

• Unisem Group (Flip Chip Packaging, Multi-Chip Module Packaging)

• Walton Advanced Engineering Inc. (High Frequency RF Packaging, Thermal Management Solutions)

• Carsem Malaysia (Chip-on-Board Assembly, Wafer Level Packaging)

• Integrated Micro-Electronics, Inc. (IMI) (Automotive Electronics, Consumer Electronics Assembly)

• Lingsen Precision Industries, Ltd. (QFN Packaging, Wafer Level Chip Scale Packaging)

• STATS ChipPAC Ltd. (System-in-Package (SiP), Leadframe Package Solutions)

• Simec Group (Bumping and Packaging, Assembly of MEMS Devices)

• Siliconware Precision Industries Co., Ltd. (Advanced Packaging, 3D Packaging)

• Qualcomm Technologies, Inc. (RF Front End Modules, Custom Semiconductor Packaging)

• Jiangsu Changjiang Electronics Technology Co., Ltd. (IC Packaging, Test Services)

• Nippon Chemi-Con Corporation (Capacitor Packaging, Power Electronics Packaging)

Recent Development

• October 2024: Amkor Technology entered into an advanced semiconductor packaging and testing agreement with Taiwan Semiconductor Manufacturing Company (TSMC). This partnership focuses on establishing an OSAT facility in Peoria, Arizona, aimed at supporting TSMC's customers, particularly in advanced packaging technologies like Integrated Fan-Out (InFO) and Chip on Wafer on Substrate (CoWoS)​.

• September 2024: ASE Group announced a significant investment to enhance its semiconductor assembly and test capabilities, aiming to increase production capacity in its facilities located in Malaysia and China. This expansion is part of ASE's strategy to meet rising global demand for semiconductor packaging​.

• August 2023: SPIL launched a new semiconductor assembly and testing facility in Kaohsiung, Taiwan. This facility is designed to handle increased production demands and focuses on advanced packaging technologies, including 3D packaging and chip stacking​.