Global Semiconductor Assembly & Testing Service (SATS) Market is poised to touch an approximate valuation of USD 28 Billion by 2022, registering a 4.5% CAGR during the review period (2016 to 2022).
The SATS market is driven by the rising demand from consumer electronics companies due to the increasing sales of electronics equipment. Semiconductor companies are investing in improving their production lines, which, in turn, drives the SATS market.
The COVID-19 outbreak has resulted in the closing down of several manufacturing facilities worldwide, causing huge revenue losses in end-use industries like consumer electronics, information technology, telecommunication, automotive, and more. Also, the coronavirus-driven lockdown put a brake on the production of several key raw materials in the global market, which resulted in spiking product prices and lowered the demand.
Digital technology has accelerated aggressively during the onset of the COVID-19 pandemic. The global economy is struggling to adapt to changes brought by the COVID-19 pandemic, and industries are trying to sustain their momentum in digital transformation, adapting to the new normal of implementing remote workstations.
This, as a result, is driving the demand for semiconductors further. Semiconductor companies are trying to scale up their operational blueprints by investing in technology and infrastructure to level up their game, which in turn is driving the SATS market demand.
The semiconductor assembly and test industry is rapidly getting back to normal to eliminate the widening demand-supply gap of semiconductor chips. Also, it is expected that the SATS demand could pick up following the uplift of the lockdown in numerous countries.
Rising Semiconductor Demand to Bolster Market Growth
Semiconductor assembly plays a vital role in determining the pricing of final products. The next big factor impacting semiconductor production is testing processes that further ensure high quality and reliability. Growing demand for semiconductors from the consumer electronics industry and the rapid growth in the semiconductor industry drives the semiconductor assembly and testing services market.
The semiconductor assembly & testing service market size is also boosted by the recent growth in consumer electronics with innovation and technology advancements. Besides, the rise in disposable income and economic growth worldwide influence the growth of the SATS market.
Emerging Nations to Offer Robust Opportunities
The spurring rise in semiconductor industries in developing regions is projected to offer significant market opportunities. The demand for higher packaging technologies has elevated with the proliferation of smartphones and tablets in emerging nations; this, as a result, is estimated to create the potential for the SATS market. Additionally, the efficient supply chain facilitated by the SATS providers has reduced the time to market, thus becoming the priority choice of integrated design manufacturers.
Furthermore, the increase in the use of automated control system technology in various industries is another factor projected to contribute to the SATS market growth. Besides, semiconductor manufacturing companies aimed to meet the high market demand from electronics sectors are outsourcing semiconductor assembly and test services (OSATS) to improve their core competencies, which are projected to offer significant market growth opportunities.
High Costs to Restrain Market Growth
High costs associated with semiconductor assembly and test services and outsourced semiconductor assembly and test (OSAT) are major factors restraining market growth. This is due to the fact that the wafer fabrication process involves higher CAPEX and operational costs for testing and packaging. Also, building and maintaining a state-of-the-art factory for wafer fabrication is an expensive affair, which subsequently increases the SATS prices.
The SATS Market is segmented into Services, Applications, and Regions.
Assembly Service is the Largest Segment
The services segment is sub-segmented into assembly, packaging, and testing. The application segment is bifurcated into consumer electronics, Information technology, telecommunications, automotive, industrial, and others. Among these, assembly service is the largest segment in the market. In 2015, the assembly service segment accounted for a valuation of USD 11.6 billion, which is expected to grow further to USD 15.7 billion by 2022 with a 4.6% CAGR.
Telecommunication is the Largest Application Segment
The application segment is sub-segmented into consumer electronics, information technology, telecommunication, automotive, and industrial. Among these, telecommunication is the largest application segment. The telecommunication segment accounts for the largest market share. The segment was valued at USD 8.09 billion in 2015 and is projected to reach a valuation of USD 11.3 billion in 2022 registering a 5.31% CAGR during the assessment period.
APAC is the Largest Regional Segment
By region, the market is bifurcated into the Americas (US, Canada, Mexico, Rest-of-North America) and South America, Europe (the UK, Germany, France, Italy, and Rest-of-Europe), Asia Pacific (China, Japan, India, South Korea, and Rest-of-the-APAC), and Rest-of-the-World. Among these, the APAC region accounts for the largest market share, followed by North America and Europe, respectively.
The Asia Pacific Market to Maintain its Leading Position
APAC has always been the SATS market leader and would maintain its leading position throughout the assessment period. APAC is the largest market for semiconductors providing advanced semiconductor chips to global markets. In 2015, the Asia Pacific accounted for a 45% share in the global semiconductor assembly and testing services market.
Factors behind the market growth include the growing demand for electronic equipment by the customer and the vast presence of key players such as Silicon Precision industries and Powertech Technology. Besides, the high presence of leading manufacturing industries and semiconductor companies gives APAC an edge over other regions. Japan, China, and India are leading markets for semiconductor assembly and testing services in the region.
With the largest presence of consumer electronics industries, huge development in semiconductor industries, and increased demand from telecommunication industries, Japan, China, and India offers significant opportunities to semiconductor assembly and test companies and outsourced semiconductor assembly and test (OSAT market) .
North America Holds Second-Highest Share in Global Market
North America accounts for the second-highest share in the global market. In 2015, North America held over a 25% share in the global semiconductor assembly and testing service market. Key growth driver behind the regional market development is the strong demand for semiconductor assembly and testing services and increasing manufacturing of consumer electronics equipment demanding assembly and packaging services. The US dominates the regional market with its large presence of leading companies like advanced semiconductor engineering, Angkor technology, Chipbond technology, and many others.
Europe is Emerging as a Promising Market for SATS
Europe is rapidly emerging as a promising market for semiconductor assembly and testing services and is expected to display a sharp rise throughout the forecast period. In 2015, the region accounted for a 20% share in the overall SATS market. Factors such as the growing telecommunication and IT industry and economic developments in major European countries are the major contributors to market growth.
Players Focus on Product Development & Expansion Plan
Highly competitive, the semiconductor assembly & testing service market appears fragmented due to the presence of several well-established players. Mergers & acquisitions, innovation, and expansion remain prevailing key trends for the semiconductor assembly & testing service companies as these strategic moves support their growth and expansion plans. They deliver reliable, leading-edge products and services. For which they invest substantially in R&D to develop adept technologies and product portfolio.
Advanced Micro Devices, Inc. (AMD) is a US-based leading global semiconductor manufacturer. AMD has grown into a global company achieving a much important industry focusing on leading-edge semiconductor products. AMD develops high-performance computing and visualization products to solve some of the world’s toughest and most interesting challenges. The company is also an aggressor in funding COVID-19 HPC, helping power university research.
Recently, AMD teamed with Penguin Computing to contribute high-performance computing (HPC) systems for pandemic research. The recipient universities are estimated to utilize the new compute capacity across various pandemic-related workloads, including genomics, vaccine development, transmission science, and modeling.
Amkor Technology, Inc. (U.S.), Advanced Semiconductor Engineering, Inc. (U.S.), Siliconware Precision Industries Co., Ltd. (Taiwan), Powertech Technology Inc. (Taiwan), STATS ChipPAC Ltd (Singapore), CORWIL Technology (U.S.), Integrated Micro-Electronics, Inc. (U.S.), Chipbond Technology Corporation (U.S.), and Global Foundries (U.S.) are some of the affluent contenders holding sizeable SATS market share.
Jan. 12, 2021 – Tinicum, L.P., a diversified global manufacturer of highly specialized industrial solutions along with affiliated funds managed by Tinicum Incorporated, announced the acquisition of Robert Family Holdings, LLC. and changed its name to TSL Engineered Products, LLC. One of its wholly-owned operating subsidiaries—Advantek, LLC, manufactures carrier tape and associated products for the semiconductor industry. Advantek has over 35 years of component delivery experience for a customer base that includes leading semiconductor manufacturers, foundries, and assembly, and test service providers.
Jan. 8, 2021 – ChipMOS Technologies Inc. (Taiwan), an industry-leading provider of outsourced semiconductor assembly and test services (OSAT), announced that its revenues have increased 13.1% for the full year 2020 compared to 2019, representing the highest level since 2014. The Company noted that it benefitted from continued strong memory and DDIC demand throughout 2020, with improvements in both volumes and pricing. Also, that the company achieved higher utilization levels led by end-market demand strength in cloud infrastructure, gaming, mobile and industrial.
June 13, 2020 – Four top global companies in the assembly, testing, marking, and packaging (ATMP) business, including Taiwanese majors ASE Technology Holding, announced that they are planning to set up their manufacturing units in India to develop export hubs to undertake outsourced semiconductor packaging and test services.
Oct.15, 2015 – AMD, a leading semiconductor manufacturer, announced its plans to spin off its back-end manufacturing operations by forming a new joint venture (JV) with Nantong Fujitsu Microelectronics (NFME). Dubbed ATMP is for assembly, test, mark, and pack – these back-end operations are in modern times split up from the fabbing step for cost reasons. Through JV, AMD is essentially buying the bulk of these operations. The JV gives NFME the ability to further expand into the market for semiconductor assembly and test services (SATS).
The SATS market analysis features unique and relevant factors anticipated to significantly impact the market growth during the assessment period. The detailed research report would help industry players to understand the market better. The report defines the historical and current SATS market trends boosting the growth of the market.
Additionally, the COVID-19 impact on the semiconductor assembly & testing service industry is also included in the report. Regional assessment in this report and unlocks several untapped opportunities in regional and international markets. Detailed company profiling enables users to evaluate company shares, emerging product lines, pricing strategies, innovation possibilities, the scope in new markets, and much more.
Frequently Asked Questions (FAQ) :
Increasing demand for consumer electronics is supposed to expand the market exponentially in the coming years.
The segments based on services are assembly, testing, and packaging.
The assembly segments are projected to dominate the market and thrive at 4.6% CAGR.
the telecommunication segment is assessed to earn revenues worth USD 11.3 Bn by 2022.
Asia Pacific held around 45% share in 2016.
The growth of the consumer electronics industry is supposed to drive the proliferation of the regional market.
The major players profiled are Amkor Technology Inc., Advanced Semiconductor Engineering Inc., and Silicon Precision Industries Co. Ltd.