Advanced Semiconductor Packaging Market Size, Share, and Trends 2024 to 2034

Advanced Semiconductor Packaging Market Size to Worth USD 83.35 Bn by 2034

The global advanced semiconductor packaging market size was USD 35.60 billion in 2023, calculated at USD 38.46 billion in 2024 and is expected to reach around USD 83.35 billion by 2034, expanding at a CAGR of 8.04% from 2024 to 2034. The advanced semiconductor packaging market is driven by the need for a reduction in size.

Advanced Semiconductor Packaging Market Key Takeaways

• Asia-Pacific dominated the advanced semiconductor packaging market in 2023.
• North America is observed to be the fastest growing in the advanced semiconductor packaging market during the forecast period.
• By packaging type, the flip chip segment dominated the market in 2023.
• By packaging type, the fan-out wafer-level packaging segment is observed to be the fastest growing in the advanced semiconductor packaging market during the forecast period.
• By application, the central processing units/ graphical processing segment shows a significant growth in the advanced semiconductor packaging market in 2023.
• By application, the processor/baseband segment shows a notable growth in the advanced semiconductor packaging market during the forecast period.
• By end-user, the consumer electronics segment dominated the advanced semiconductor packaging market in 2023.
• By end-user, the telecommunications segment is observed to be the fastest growing in the market during the forecast period.

Market Overview

A group of manufacturing techniques called advanced semiconductor packaging combines several semiconductor chips into one electronics package. This method lowers costs and power consumption while increasing capabilities. Recently, the Indian government unveiled plans to increase its capacity for producing semiconductors. With an investment of Rs. 76,000 crores, the government has also started a " Semicon " program to encourage the nation's semiconductor industry.

Advanced Semiconductor Packaging Market Trends

• To boost the local chip-packaging industry, a vital link in the semiconductor supply chain that Washington fears is being dominated by Asia, the US Commerce Department is initiating a $3 billion program.
• In response to worldwide demand, Taiwan Semiconductor Manufacturing Company (TSMC) is investing around 90 billion New Taiwan dollars (US$2.9 billion) to construct a state-of-the-art chip packaging facility in Taiwan. Semiconductor packaging shields the chips from heat or light damage and chemical contamination. It can be composed of glass, ceramic, plastic, or metal.
• A state-run R&D initiative for semiconductor packaging technology, which is necessary to produce the high-performance, low-power chips required for AI applications, will get a grant of 274.4 billion won ($200 million) from South Korea. With less than 10% of the market controlled by Korea, the government expenditure seeks to close the gap between Taiwan, China, and the US in the semiconductor back-end process market.
• TSMC's majority-owned manufacturing unit in Kumamoto Prefecture, Japan, plans to start construction on a second fab by the end of 2027. Toyota will also acquire a small share. With strong backing from the Japanese government, the total investment in JASM is expected to surpass US$20 billion, with the company's first fab expected to begin operations in 2024.
• To raise roughly $40 billion for its semiconductor industry, China announced that it is ready to open a new state-backed investment fund. The nation is working harder to catch up to the US and other competitors. The China Integrated Circuit Industry Investment Fund, often known as the Big Fund, has opened three funds, the largest of which is probably this one.
• Washington invested $3 billion in the silicon war to outpace Asia.

Advanced Semiconductor Packaging Market Growth Factors

• Advanced packaging strategies are necessary as electronics become smaller. This drives the growth of the advanced semiconductor packaging market.
• Growing market need for high-performance computing in industries such as data centers, automotive electronics, and consumer electronics (CPUs, GPUs).

Market Scope

Market Dynamics

Drivers

Increase in adoption of electronic devices

Innovative semiconductor packaging can supply compact, high-performance components for modern smartphones and tablets. Advanced communication choices (5G), cameras, and sensors necessitate complex packaging solutions. Smart household appliances and industrial sensors need specialized and dependable semiconductor packages for their Internet of Things devices. Advanced packaging makes better communication features and processor unit integration within tiny, low-power devices possible. This drives the growth of the advanced semiconductor packaging market.

Penetration of 5G technology

Compared to earlier generations, 5G technology promises substantially faster data rates and lower latency. For this, semiconductors capable of handling fast data processing and communication are needed. Advanced semiconductor packaging technologies like 2.5D and 3D integration are crucial to achieve these performance standards. By lowering the distance over which signals must travel, these technologies enable chips and components to be placed closer together, increasing speed and efficiency.

5G networks need to integrate several components and provide seamless communication. Innovative semiconductor packaging makes combining many elements, including digital, RF, and analog, into a single package easier. This integration enhances performance and decreases latency, which is necessary for 5G's requirement for dependable and fast communication.

Restraint

Challenges in thermal management

The power density (power per unit area) of devices rises with decreasing size, raising the temperature in small areas. To avoid overheating, this calls for more effective thermal management techniques. Because of their improved functionality and performance in a small package, advanced semiconductor packages, including multi-chip modules (MCMs), system-in-package (SiP), and 3D integrated circuits (ICs), often produce more excellent heat.

Adopting sophisticated thermal management techniques, like heat pipes or liquid cooling, can be costly and raise the semiconductor package's overall cost. Complex manufacturing procedures are frequently needed for advanced heat management solutions, which increases production costs and causes yield problems. Manufacturing is made more difficult by guaranteeing uniformity and dependability in thermal performance. This limits the growth of the advanced semiconductor packaging market.

Opportunities

Surge in demand for consumer wearable devices, home appliances and smartphones

Consumer wearables, household appliances, and smartphones are getting smaller while needing to provide more sophisticated features. This trend demands that several components be integrated into a single package and made smaller. Complex semiconductor packaging methods allow different components (processors, sensors, memory, etc.) to be integrated into a single small package. These technologies include System-in-Package (SiP) and Multi-Chip Module (MCM). The desire for more functionality in smaller form factors drives the need for creative packaging solutions.

Rising global trend towards IoT and AI technologies

Advanced packaging methods are becoming increasingly necessary to facilitate downsizing while preserving performance and reliability as electronics get smaller and more integrated. There is little room for gadgets like medical implants, smartwatches, or cell phones. More functionalities may be crammed into smaller form factors thanks to advanced packaging. Combining several functions (such as CPUs, memory, and sensors) into one unit can decrease a device's total footprint while performance improves. This is especially crucial for Internet of Things devices, frequently deployed in various challenging situations.

The reliability and speed of data transfer significantly impact the functioning of AI and IoT systems. Modern packaging technologies facilitate high-speed interconnects necessary for quick communication and data processing. Reduced transmission latency is essential for the Internet of Things and real-time AI applications. This opens an opportunity for the growth of the advanced semiconductor packaging market.

Packaging Type Insights

The flip chip segment dominated the advanced semiconductor packaging market in 2023. Flip-chip technology's direct connection between the chip and the substrate makes better heat dissipation possible. This is essential for high-power applications and guarantees the device's durability and dependability. By offering strong mechanical support, solder bumps lower the possibility of damage from mechanical stress and heat cycling.

The fan-out wafer-level packaging segment is observed to be the fastest growing in the advanced semiconductor packaging market during the forecast period.  Fan-out wafer-level packaging (FOWLP) provides better electrical performance than conventional packaging techniques. FOWLP lowers parasitic losses and improves signal integrity by doing away with the requirement for wire bonding and utilizing shorter interconnects, which enhances the overall performance of the semiconductor devices. FOWLP can be less expensive than conventional packaging methods since it employs fewer materials and does away with the substrate. Lower production costs result from the wafer-level process's streamlining of the manufacturing phases.

Application Insights

The central processing units/ graphical processing segment shows a significant growth in the advanced semiconductor packaging market in 2023. More transistors can fit into a smaller area thanks to advancements in semiconductor technology, which results in more potent and efficient CPUs and GPUs. This results from Moore's Law's ongoing applicability, notwithstanding the physical constraints on ever-smaller nodes. The need for solid GPUs, which are necessary for parallel processing jobs, has increased due to the rise of AI and ML applications. The market for sophisticated packaging has grown to meet the demand for improved performance and efficiency.

This technology maintains a small form factor while enabling more external connections, which results in improved performance and reduced power consumption. It is especially advantageous for high-end GPUs and CPUs.

The processor/baseband segment shows a notable growth in the advanced semiconductor packaging market during the forecast period. Advanced processors are becoming more and more necessary as high-performance computing (HPC) becomes more widely used in fields like artificial intelligence (AI), machine learning (ML), data analytics, and cloud computing. Because these applications need processors with more processing power, there is a growing need for new packaging solutions to enable better efficiency and performance. Another significant element driving the growth of the processor/baseband category is the proliferation of Internet of Things (IoT) devices. IoT devices, which are frequently small and power-efficient, need adequate processing power and networking options. IoT CPUs and baseband units require a specific performance and form factor provided by advanced packaging methods.

End-user Insights

The consumer electronics segment dominated the advanced semiconductor packaging market in 2023. Due to the widespread use of smartphones and tablets, more sophisticated semiconductor packaging is now required. These devices need high-performance, small-sized, and power-efficient components. Advanced packaging technologies like System-in-Package (SiP) and Fan-Out Wafer-Level Packaging (FOWLP) satisfy these criteria, allowing for larger integration densities and better thermal management.

Miniaturized semiconductor packages are becoming increasingly necessary as consumer devices become more powerful and smaller. Thanks to advanced packaging technologies like Through-Silicon Via (TSV) and 3D IC, multiple chips can be stacked in a single package, reducing footprint and improving performance.

The telecommunications segment is observed to be the fastest growing in the advanced semiconductor packaging market during the forecast period.  The telecom sector is primarily driven by the global deployment of 5G technology. Advanced semiconductor components that can manage faster data rates, reduced latency, and more network capacity are needed for 5G networks. Innovative packaging techniques must be used to incorporate many functions into smaller form factors while retaining performance and reliability.

Regional Insights

Asia-Pacific dominated the advanced semiconductor packaging market in 2023. Asia-Pacific has established a strong infrastructure for producing semiconductors, especially in Taiwan, China, Japan, and South Korea. This includes state-of-the-art fabrication facilities and the assembly and testing skills required for semiconductor packaging. By being near the supply chain for the equipment, components, and raw materials needed for semiconductor packaging, Asia-Pacific businesses can handle logistics more effectively and save lead time, speeding up production cycles.

Major Trends in Taiwan Semiconductor Industry

• Taiwan's TSMC is considering expanding its capacity for sophisticated packaging in Japan. This action would strengthen Japan's attempts to revive its semiconductor sector.
• Prominent semiconductor producer Taiwan Semiconductor Manufacturing Co. reported a robust $75.881 billion in revenue for the fiscal year 2022. According to data from 2023, the company manufactures roughly 10 million semiconductor wafers annually

North America is observed to be the fastest growing in the advanced semiconductor packaging market during the forecast period. The automotive, consumer electronics, telecommunications, and healthcare end-user industries in North America are among the many that have a substantial demand for innovative semiconductor packaging solutions. These sectors need to use cutting-edge packaging technology to increase efficiency, minimize size, and improve the performance of electronic gadgets. Advanced semiconductor packaging methods are becoming increasingly necessary to accommodate the growing customer demand for high-performance electronic gadgets with smaller form factors. Companies in North America are leading the way in developing innovative packaging methods to satisfy these demands.

• The Semiconductor Industry Association estimates that $61.1 billion of semiconductors were exported from the US in 2022.
• The US government's CHIPS Act 2022 allots $52 billion for chip production and provides tax breaks and other incentives to firms that produce semiconductors. By bolstering the country's semiconductor market, the component of this act is intended to assist in the manufacture and manufacturing of semiconductor chips.
• $181.94 million is to be invested by the Canadian government in the nation's semiconductor manufacturing sector.

Advanced Semiconductor Packaging Market Companies

• Advanced Micro Devices, Inc
• Intel Corporation
• Hitachi, Ltd.
• Avery Dennison Corporation
• ASE Technology Holding Co., Ltd
• Amkor Technology
• STMicroelectronics
• Infineon Technologies
• Sumitomo Chemical Co, Ltd.
• ASE Technology Holding Co, LTD
• KYOBERA CORPORATION

Recent Developments

• In July 2024, the world's most prominent memory chip manufacturer, Samsung Electronics Co., has established a team tasked with creating advanced high-bandwidth memory, or HBM memory, a key component of artificial intelligence (AI) gadgets.
• In July 2024, With the participation of five US enterprises, US-JOINT increased the scope of open consortiums based in Japan and led by Resonac in the US. US-JOINT R&D is being established by co-investment with the partners and will take place at a new R&D facility in Union City, California. The cleanroom construction and equipment installation will start this year, and the facility is anticipated to be completely operational by 2025.

Segments Covered in the Report

By Packaging Type

• Fan-out Wafer-level Packaging
• Fab-in Wafer-level Packaging
• Flip Chip
• 2.5/3D

By Application

• Processor/Baseband
• Central Processing Units/ Graphical Processing Units
• Dynamic Random Access Memory
• NAND
• Image Sensor
• Others

By End-user

• Telecommunications
• Automotive
• Aerospace and Defense
• Medical Devices
• Consumer Electronics
• Others

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East & Africa