China: Strong Market Growth And Innovation In Packaging

By Shanshan Du

Since the mid-1980s, packaging and assembly have been key segments of the semiconductor supply chain in China. In the past decade, the fast growing market of electronic product manufacturing in China occurred concurrently with the innovation and growth in China for packaging and assembly.

SEMI China researched the packaging and assembly industry segment and observed a total of 147 semiconductor packaging and assembly related companies, representing, by revenues, 96 percent of the semiconductor package manufacturers in China. Most companies are concentrated in the “Yangtze River Delta” area, covering Jiangsu, Shanghai and Zhejiang provinces, and in the Pearl River Delta area of Guangdong province. Sixty-five percent of all packaging companies in the SEMI China research are located in Jiangsu, Guangdong or Shanghai.

This large base for packaging and assembly, which includes discrete, power, and LED packaging companies, results in China being the largest regional market consuming packaging equipment (with $800 million sold in 2015 and a similar amount or higher estimated for 2016). For packaging materials, China is the second largest market globally — second only to Southeast Asia — and total packaging material sales are expected to reach $4.4 billion in 2016.

In 2014, the national government published the National Integrated Circuit Industry Development Promotion Summary (2014), also known as national “Guideline,” and it is considered as a prime driver directing new investments in the China IC industry. This Guideline addresses development targets, approaches, and measures for advancing the capabilities and the standing of China companies in the global semiconductor industry.

According to the guideline for IC packaging and test, revenues from mid-end to high-end technologies shall exceed 30 percent of total revenues by 2015, and key technologies supplied by China packaging subcontractors shall achieve world class levels by 2020.

In recent years, domestic packaging subcontractors are more and more active in the global outsourcing market and have also been active in terms of mergers and acquisitions. The three leading semiconductor package subcontractors in China ─ Jiangsu Changjiang Electronics Technology (JCET), Nantong Fujitsu

(NFME), and Tianshui Huatian (Huatian) ─ are all developing advanced processes and increasing their respective capabilities to serve both China and overseas companies.

China packaging companies have emerged as key providers of flip chip based technologies, with bumping used for various applications including wafer-level packaging (WLP) and CMOS Image Sensor Through Silicon Via (CIS-TSV). Both domestic and overseas companies have bumping facilities located throughout China

Compared to IC wafer fabrication and IC design, IC Packaging and Testing is a relatively mature industry in China, whose fast growth period began two decades ago when international chip makers started to relocate package and testing houses to China. This was followed by the semiconductor assembly and test services (SATS) providers. Now both overseas and domestic packaging plants provide leading edge packaging solutions in China, and we are witnessing the emergence of a supply chain in China to support this critical industry segment.In addition to domestic packaging and bumping companies, domestic semiconductor equipment suppliers are exploring new applications in advanced packaging manufacturing. These domestic equipment suppliers, which previously focused on front-end tool development and promotion, find that their products can satisfy the requirements for WLP and TSV. Equipment companies have shipped tools to domestic packaging subcontractors for middle-end or back-end use in advanced packaging assembly and are seeking to export to Southeast Asia package companies.

—Shanshan Du is a senior analyst for industry research and consulting for SEMI China.