Semiconductor Assembly and Test Services (SATS) Market Size, Share & COVID-19 Impact Analysis, By Service Type (Assembly & Packaging and Testing), By Application (Communication, Automotive Electronics, Industrial, Consumer Electronics and Computing and Networking) and Regional Forecast, 2021-2028

The global semiconductor assembly and test services (SATS) market was valued at USD 30.71 billion in 2020. The market is projected to grow from USD 31.86 billion in 2021 to USD 46.24 billion by 2028, exhibiting a CAGR of 5.5% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with SATS experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a rise of 3.0% in 2020 as compared to 2019. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

The semiconductor assembly (also referred to as packaging) and test services are vital part of the semiconductor manufacturing process. The major service-providing companies are heavily investing in equipment and processes thus, enabling testing of wafers/parts coupled with high-tech research-driven packaging solutions. Most companies rely on outsourcing as the cost associated with assembly and test services is a major concern.

Ever-growing electrification across the automotive sector and increasing consumer electronics demand attributed to the rise of 5G technology are boosting the assembly and testing services demand. In addition, factors including, escalating demand for power-efficient devices, rising adoption of cloud services, supremacy of portable and wireless electronic products are driving the global semiconductor assembly and test services (SATS) market growth. Technological advancements and the rise in R&D activities are brightening the market prospects.

Moreover, major market participants are leveraging their resources in designing and relating their expertise in enhancing the chipsets or IC's performance. In accordance, the companies are also offering value-added services such as failure analysis, package design, and others across industrial, automotive, consumer electronics, computing, communication, and other applications.

COVID-19 Impact: Disrupted Supply Chains Hampered the Semiconductor Assembly and Test Services (SATS) Market Outlook

The U.S.-China trade war, 2019’s down cycle and the recent COVID-19 pandemic collectively affected the global economy and related technology industry. This market experienced moderate impact attributed to the supply chain disruption and shutdown of multiple manufacturing facilities across the globe. Countries such as India, Malaysia, the U.S., China, Taiwan, and others have witnessed drastic aftermath of the COVID-19 pandemic. Whereas, Vietnam relatively had a low impact attributed to the growing demand for semiconductor devices across the electronics industry. For instance, as per the ‘International Data Corporation (IDC)’, the worldwide semiconductor industry revenue contracted by ~6% (with 54% of probability) in the year 2020.

However, to cope with the chip shortages and related services amidst the pandemic period, countries across the globe are establishing testing and packaging service units that in turn, are anticipated to boost the market growth. In accordance, with the consumer, automobile electronic companies are anticipated to invest in semiconductor assembly and testing units to further lower the global impact. For instance, Tata Sons Private Limited is in discussion with three Indian states namely, Telangana, Tamil Nadu, and Karnataka to invest ~USD 300.0 million to set up an assembly and testing unit.

Considering the above-mentioned factors, the global market is projected to witness strong growth in the forecast period.

LATEST TRENDS

Augmented Electrification across Automobiles to Boost Market Demand

In the current era, electrification across automobiles is taking a sharp turn. Semiconductor products have started to change the automotive industry whether its two-wheeler, three-wheeler, or giant wheel vehicles. Design innovations and enhancements in automobiles have indirectly resulted in the increasing semiconductor assembly’s demand. Automation and electrification of automobiles are leading to the increased need for semiconductor assembly and testing equipment. The incorporation of matrix LED lights, lidar sensors, bipolar transistors, batteries, and others have increased the demand for semiconductor assembly and test services across the globe.

In addition, the emergence of electric vehicles is boosting semiconductor testing services as it requires reliable testing before the installation to ensure the best on-road performance and optimum safety. For instance, the International Energy Agency (IEA) stated that, in 2020, the electric car sales touched 3 million, i.e., 40% up from 2019.

Therefore, augmented electrification across the automobile sector is a trending factor across the global SATS market.

DRIVING FACTORS

Increasing Demand for Consumer Electronics to Brighten the Market Prospects

The ever-growing utilization of consumer electronics including, smartphones, refrigerators, television sets, computers, and others is driving the growth of the market. In the future ahead, the semiconductor manufacturing sector is expected to witness amplified demand for skilled technicians, as semiconductors are critical across industries that are allied to consumer electronic appliances, such as information technology, telecommunications, machine automation, power & solar photovoltaic, and others.

Additionally, the development of low-power chips for portable devices is on the rise. Moreover, increasing connectivity and mobility capabilities coupled with growing digital content are encouraging global market growth during the forecast period.

RESTRAINING FACTORS

Hefty Investments for Packaging Solutions is Hampering the Market Growth

The high-end semiconductor testing and assembly business require high capital investment for producing expensive equipment. Increasing demand for low thermal ratings requires the adoption of advanced packaging solutions. Leading market participants are well-versed with these investments. However, small and medium companies find it difficult to offer high-end services thus, hampering the global market growth.

Additionally, in the current time period, leading companies are experiencing the chip shortage and fluctuations in exchange rates attributed to the COVID-19 pandemic situation. However, the consumer electronic, networking, industrial, and automobile companies are anticipated to invest in semiconductor assembly and testing units to further lower the global impact.

SEGMENTATION

By Service Type Analysis

Testing Segment to Portray Highest CAGR owing to Validation of Quality Products

Based on the service type, the global market is segmented into assembly & packaging and testing.

In terms of CAGR, the testing services segment is leading the global semiconductor assembly and test services market. It is because, testing includes, functional, physical, and electrical testing of the product that verifies the quality of the product. The ever-growing electronic products’ demand across industries requires quality testing including, x-ray inspection, lead frame fabrication, and others.

On the other hand, the assembly & packaging segment holds the highest market share attributed to constant development across technologies such as organic-substrate-interposer technology, silicon interposer assembly, and others. These advancements are useful in 3D packages, integrated circuits, image sensors attributed to their improved test times & scalability, and low cost.

By Application Analysis

Penetration of Smartphones and Other Devices to Drive Consumer Electronics Application Segment

Based on the application, the market is categorized into communication, industrial, automotive electronics, consumer electronics, and computing and networking.

The consumer electronics segment is estimated to capture the highest CAGR in the forecast period. It is attributed to the growing consumption of smartphones, tablets, smart television sets, the adoption of 5G technologies, and others. Semiconductor assembly and test services play a significant role in the operational working of these devices as they are being tested before usage. Additionally, portable electronics, smart homes, and other products are witnessing aggressive demand across the countries.

The automotive segment is observing second-highest growth owing to, the amplified demand for Semiconductor assembly and test services for autonomous vehicle technology. In the automotive industry, electronic components are crucial for security. Additionally, the testing of batteries across electric vehicles is demanding testing services thus, propelling the global semiconductor assembly and test services market growth.

Industrial, communication computing and networking segments are witnessing steady growth in the market. Assembly services are utilized to produce integrated circuit chips and then test the product before shipping out. As a result, these services are highly required across industrial and other applications. The IT and telecommunications products demand safeguarding the effective communications. It has eventually improved in many businesses that propelled the growth of the computing and networking segment.

REGIONAL INSIGHTS

The market is characterized into North America, Europe, Asia Pacific, the Middle East & Africa, and South America and is further divided into countries.

Asia Pacific is in the best position to lead the market attributed to the existence of leading players across China, Taiwan, Japan, India, and other countries. In addition, the Semiconductor Industry Association (SIA) stated that ~80.0% of semiconductor assembly/test operations and foundries are concentrated in Asia in turn, fueling the market growth. The growing automotive industry and encouraging work from the concept are the key factors that drive the semiconductor assembly and testing services growth across the region.

Fast-paced Electronics Market to Uphold China Market with Maximum CAGR

China is one of the biggest semiconductor markets across the globe. In July 2021, the Semiconductor Industry Association (SIA) stated that China produces 36.0% of the world’s electronic devices including, computers, cloud services, and others and it is the second-largest final consumption market to only the U.S. for electronic devices embedded with semiconductors. In addition, the country is witnessing several initiatives related to semiconductor equipment research & manufacturing, and investments to encourage import-export trading and establish assembly and testing services facilities across the country. For instance, in 2020, SIA stated that China assembled 35.0% of the globe’s electronic devices thus, complimenting the SATS market growth.

Considering the aforesaid factors, the China SATS market is anticipated to witness the highest CAGR in the forecast period.

North America is one of the stable SATS market. Key company’s presence and their leadership in the semiconductor industry is the prime factor that boosts the demand. In accordance, with the 2019 factbook, SIA stated that in 2018, the U.S. semiconductor industry invested nearly USD 38.7 billion in R&D thus, boosting the market growth.

Europe is probable to capture considerable market shares. It is owing to, the escalating adoption of 5G networks is creating robust opportunity for the Europe market players to develop progressive RF modules by utilizing system-in-package (SIP) technology for connectivity. Additionally, the emergence of the Internet of Things (IoT) across electronic products is complimenting the global market growth.

The Middle East & Africa, and South America are anticipated to grow at a considerable rate with the effect of the rising disposable income levels and increased utilization of portable devices and others across Brazil, Saudi Arabia, UAE, and others. Gulf countries are constantly adopting technologically advanced electronic products including, electric vehicles and consumer products that have bolstered the assembly and testing services demand across the region.

KEY INDUSTRY PLAYERS

Leading Players Expanding their Market Presence with Long-term Investment Plans

Leading market participants are strategically investing in geographical and factory capacity expansion by building industry-leading factories across the countries. With this, the global market is experiencing reliable supply chain processes by complimenting customers’ demands. For instance, in November 2021, Amkor Technology plans to build a factory with innovative offerings in Bac Ninh, Vietnam. The 1^st phase focuses on offering ‘Advanced System in Package (SiP)’ test and assembly solutions to the leading electronic manufacturing and semiconductor companies across the globe.

ASE Group is Collaborating with Governmental Organization to Develop Industry-leading Graduates

ASE Group emphasizes delivering industry-leading semiconductor assembly and testing facilities and is also designing courses for graduates to boost industry growth and contribute to economic growth. For instance, in October 2020, ASE Group in collaboration with the ‘National Kaohsiung University of Science and Technology (NKUST)’ has developed an on-site campus talent development facility of semiconductor assembly and test (SAT). It is an initiative of the ‘Ministry of Education (MOE)’ to implement training in vocational and technical schools.

LIST OF KEY COMPANIES PROFILED:

• Amkor Technology (U.S.)


• ASE Group (Taiwan)


• Siliconware Precision Industries Co., Ltd. (Taiwan)


• Jiangsu Changjiang Electronics Technology Co., Ltd. (China)


• Unisem (M) Berhad (Malaysia)


• Powertech Technology Inc. (Taiwan)


• Integra Technologies (U.S.)


• UTAC (Singapore)


• Tianshui Huatian Technology Co., Ltd (China)


• King Yuan ELECTRONICS CO., LTD. (Taiwan)


• Chipbond Technology Corporation (Taiwan)


• GLOBALFOUNDRIES U.S. Inc. (U.S.)


• ChipMOS TECHNOLOGIES INC. (Taiwan)


• Walton Advanced Engineering Inc. (Taiwan)


• Lingsen Precision Industries, LTD. (Taiwan)


• Teledyne Technologies Inc. (U.S.)


• Formosa Advanced Technologies Co., Ltd (Taiwan)

KEY INDUSTRY DEVELOPMENTS:

• March 2021: - Deca Technologies, a technology provider for advanced semiconductor packaging in collaboration with ASE Group and Siemens Digital Industries Software introduced ‘APDK’, an Adaptive Patterning Design Kit to cater to customers' demand in achieving innovative electrical performance.


• June 2020: Integra Technologies received the USD 3.0 million contract from Northrop Grumman, headquartered in Virginia, U.S. the company is utilizing Integra Technologies’ technology to manufacture and test military-grade microelectronics to support homeland’s warfighters.

REPORT COVERAGE

The global market research report provides detailed information regarding various insights into the industry. Some of them are growth drivers, restraints, competitive landscape, regional analysis, and challenges. It further offers an analytical depiction of the market trends and estimations to illustrate the forthcoming investment pockets. The market is quantitatively analyzed from 2021 to 2028 to provide financial competency. The information gathered in the report has been taken from several primary and secondary sources.

Report Scope and Segmentation