Outsourced Semiconductor Assembly And Test Services Market (By Service Type: Assembly & Packaging, Testing; By Application) - Global Industry Analysis, Size, Share, Growth, Trends, Revenue, Regional Outlook and Forecast 2023-2032

The global outsourced semiconductor assembly and test services market was valued at USD 37.26 billion in 2022 and it is predicted to surpass around USD 80 billion by 2032 with a CAGR of 7.94% from 2023 to 2032. The outsourced semiconductor assembly and test services market in the United States was accounted for USD 6.5 billion in 2022.

Key Pointers

• Asia Pacific held the largest revenue share of the OSAT services market, accounting for 60.28% in 2022. 
• North America is anticipated to grow at the fastest CAGR of 8.51% throughout the forecast period.
• In terms of service type, the market is bifurcated into assembly & packaging and testing. The assembly & packaging segment accounted for 82.05% of the global revenue share in 2022. 
• The ball grid array packaging segment dominated the market in 2022, capturing a revenue share of 28.36%. 
• The multi-chip packaging segment is projected to experience the highest growth, with a CAGR of 9.23% throughout the forecast period.
• The testing segment is anticipated to grow at a faster rate, at a CAGR of 9.84% throughout the forecast period. 
• The telecommunication segment accounted for the largest revenue share of 25.21% in 2022. 
• The automotive segment is also projected to register the fastest CAGR of 9.55% during the forecast period. 

Report Scope of the Outsourced Semiconductor Assembly And Test Services Market

outsourced semiconductor assembly and test (OSAT) vendors are third-party service providers offering testing, packaging, and assembly of integrated circuit devices, which ultimately helps bridge the gap between semiconductor foundries and consumers. The market growth is driven by the use of OSAT packaging and test services by semiconductor device manufacturers worldwide. The significant increase in the number of connected devices and consumer electronics, along with an increasing focus of the companies on quality improvement and end-to-end testing solutions, is expected to further drive the market growth. Furthermore, the growing dominance of fabless market players in the sales of ICs is expected to contribute to the growth of the OSAT market.

The semiconductor industry is evolving continuously in line with the continued advances in technology and integration of the latest technologies in the overall digital ecosystem. The growing demand for having maximum functionalities on a system on a chip (SOC) and ensuring optimal performance of the memory system is, particularly increasing the semiconductor intellectual property (IP) cores. As such, the growing need for more effective memory solutions is driving the development of increasingly sophisticated semiconductors capable of performing intensive memory operations.

Semiconductors are evolving continuously in line with the advances in the latest technologies, such as artificial intelligence (AI) and the Internet of Things (IoT), in particular, thereby prompting key providers of semiconductor chips to focus continuously on addressing the needs of both AI and IoT deployments and offer new, improved chips. At the same time, the continued rollout of 5G networks is driving the demand for faster, high-performance computing systems. All these trends are anticipated to open lucrative opportunities for the growth of the OSAT services market over the forecast period.

Following the continuing COVID-19 epidemic, businesses involved in manufacturing activities particularly opted for manufacturing and production solutions based on IoT technology and smart devices to facilitate remote operations and monitoring. The demand for healthcare and medical devices had already been rising in the wake of the outbreak of the pandemic; but the demand for advanced consumer electronics, such as smartphones, smartwatches, and other smart wearables, also started skyrocketing in line with the continued recovery of the market following the easing of lockdowns and other restrictions.

Several major OSAT services market players, such as Powertech Technology Inc., ASE Technology Holding Co., and Amkor, reported gains in their quarterly and annual numbers for 2020 and 2021. For instance, revenues of Powertech Technology Inc. increased 29% y/y in Q1/2020 in line with the growing demand for semiconductor chips from the incumbents of various end-use industries and industry verticals.

ASE Technology Holding Co. also reported a 9.56% year-on-year increase in revenues for Q1/2020. ASE Technology Holding Co.’s consolidated revenues grew over the year by 15.4% or by USD 2.12 billion to USD 16.96 billion in 2020. With the growing demand for 5G network equipment and high-performance servers and the continued launch of new, innovative electric vehicles globally, the demand for semiconductor components is poised for a remarkable upsurge, which bodes well for the growth of the OSAT services market over the forecast period.

Service Type Insights

In terms of service type, the market is bifurcated into assembly & packaging and testing. The assembly & packaging segment accounted for 82.05% of the global revenue share in 2022. Packaging and assembly are critical components of semiconductor production and design as they impact the power, performance, and cost at the macro level and the basic operation of all chips at the micro level. Assembly services allow the cost-efficient incorporation of functional diversifications through System-in-Package (SiP) technology. This encourages a continuing rise in functional density and reduces the cost per function, ensuring progress in the field of electronics in terms of cost and performance.

Prominent semiconductor manufacturers are offering new and improved packaging and assembly solutions to stay ahead in the fiercely competitive market. For instance, in May 2021, Samsung Electronics Co., Ltd. announced the launch of an innovative chip packaging technology, I-Cube4. By incorporating an innovative chip-packing approach, the latest technology has resulted in the more efficient and faster development of semiconductors. Designers are also incorporating miniaturized chip-scale packaging, especially for high-pin count designs. Miniaturization in semiconductor packaging helps increase density and leads to shorter signal routes, enabling higher frequencies and clocking speeds.

The packaging market is segmented into ball grid array packaging, multi-chip packaging, chip scale packaging, quad-flat & dual-inline packaging, and stacked die packaging. Among these segments, the ball grid array packaging segment dominated the market in 2022, capturing a revenue share of 28.36%. Ball grid array (BGA) packaging is an integrated circuit surface-mount packaging type that has become a preferred option for high I/O devices due to its several benefits over traditional large lead count packages. It reduces handling issues and placement problems during packaging and is used for installing electronics like microprocessors permanently.

BGA packaging can accommodate more connectivity pins than dual in-line or flat packages by using the entire bottom surface of the gadget. Meanwhile, the multi-chip packaging segment is projected to experience the highest growth, with a CAGR of 9.23% throughout the forecast period. Multi-chip packaging (MCP) is a system-in-package that combines multiple integrated circuits into a single device. MCP comes in different types, including multi-chip module plastic laminate (MCM-L), multi-chip module ceramic (MCM-C) thin film, and multi-chip module deposited (MCM-D) thin film, depending on the designer's development and complexity requirements.

An essential feature of MCP is that it utilizes standard packages as a vehicle for minimal multi-chip module (MCM) applications. End-users can quickly implement MCP since the test, handling, and installation equipment is already available in the industry. MCM technology has been utilized in products such as the Intel Pentium Pro, IBM Bubble memory MCMs, Xeon Dempsey, Pentium D Presler, Clovertown, and Sony memory sticks.

The testing segment is anticipated to grow at a faster rate, at a CAGR of 9.84% throughout the forecast period. Semiconductor testing is a vital component of the production process, particularly as Integrated Circuit (IC) architectures become increasingly sophisticated and the focus on optimizing time-to-market increases. Rapid upgrades and iterations in semiconductor chip technology and the constantly growing number of functions carried out on chips, including autonomous driving, artificial intelligence, virtual reality, cloud computing, 5G, and the Internet of Things (IoT), are driving the need for updating test equipment and testing methods.

As the number of transistors in ICs increases and increasingly complicated functionality is incorporated into each chip, the need for more efficient test methods is highlighted. Semiconductor testing guarantees that a processing flaw has not hampered a chip's operation and that the design fulfills the requisite performance criteria. IC test equipment (IC tester) and Automated Test Equipment (ATE) are systems for transmitting electrical pulses to a semiconductor device to evaluate output signals against expected values and determine if the device performs as described in design requirements.

Testers fall into three broad categories, namely memory testers, analog testers, and logic testers. A wafer test, also known as a die sort or probing test, is often undertaken before wafers are packaged. The package test, also known as the final test, is conducted after the wafers are packaged.

Application Insights

In terms of application, the market is classified into telecommunication, consumer electronics, industrial electronics, automotive, aerospace & defense, and others. The telecommunication segment accounted for the largest revenue share of 25.21% in 2022. As disruptive technologies 5G, artificial intelligence, and high-performance computing continue to influence consumer lives, demand for semiconductor devices that provide greater performance, bandwidth, lower latency, and power efficiency has increased.

Semiconductor chips play a critical role in the advent of 5G technology and in fulfilling its promise of delivering high performance and improved user experience. Telecom corporations are heavily investing in 5G chips to develop the necessary infrastructure for the large-scale deployment of the technology. Furthermore, key OSAT vendors are offering 2.5D and 3D IC packaging solutions featuring higher energy efficiency and higher packaging density for the telecom industry. For instance, ASE has introduced the high-density Fan Out technology for die stacking and multi-die solutions to deliver high bandwidth and high performance throughout the market landscape, catering to the growing demand across high-density data centers and the telecom space.

The automotive segment is also projected to register the fastest CAGR of 9.55% during the forecast period. The automobile industry has come a long way in terms of offering pre-installed electronic systems that improve the comfort and safety of vehicles. OSAT vendors play a vital role in the automotive sector supply chain. Tier-1 electronic systems suppliers in the automotive ecosystem avail services of OSAT vendors, who then incorporate the technology into modules and ship them to the original equipment manufacturers (OEM) for assembly.

Furthermore, an increasing number of integrated device manufacturers (IDMs) are availing OSAT services to build products at a faster rate while still meeting safety, quality, reliability, and overall design integrity standards. The large number of package types being used in automotive applications is also driving the demand for effective OSAT services. OSAT services ensure that automotive manufacturers meet the demand for efficient, integrated, and dependable electronics to support current automotive industry development trends.

For instance, UTAC is an ISO/TS 16949:2016 and ISO 26262-certified OSAT service provider that caters to the automobile industry. The company also specializes in the assembly and testing of semiconductors in a variety of industries and is well-positioned to assist IDMs and fabless semiconductor businesses targeting the automotive industry.

Regional Insights

Asia Pacific held the largest revenue share of the OSAT services market, accounting for 60.28% in 2022. This growth can be attributed to the presence of leading players and key innovators such as ASE Technology Holding Co., ChipMOS Technologies Inc., and HANA Micron Inc. The growth was further supported by the rapid adoption of robotic processes in various industries, particularly in the automotive and consumer electronics sectors, across Japan, South Korea, India, and China. China, India, and Taiwan are among the key regions in the Asia Pacific witnessing rapid growth in the semiconductor industry and are expected to increase their industry share in the coming years.

In October 2022, the Indian government announced a modification to its existing initiative for establishing semiconductor-related facilities, under which eligible applicants would receive financial assistance of 50% (up from 30%) of CAPEX. In 2020, the Taiwan government revealed its five-year plan to invest USD 54.15 million in the semiconductor industry to develop the necessary workforce for research and development.

North America is anticipated to grow at the fastest CAGR of 8.51% throughout the forecast period. Increased implementation of the Internet of Things (IoT), artificial intelligence, and smart devices across verticals such as healthcare, transportation, and manufacturing is one of the factors propelling the growth. For instance, the growing demand for healthcare applications such as medical instruments, consumer medical electronics, medical imaging, and diagnostic patient monitoring & therapy during and post-COVID-19 pandemic has increased the demand for semiconductors, in turn driving the demand for OSAT services.

In 2021, the U.S. held the largest share of more than 78% of the North American OSAT market. Leading players, such as Amkor Technology Inc. and Aehr Test Systems, are the major contributors to U.S. revenue. Increased demand for OSAT services from end-users, including Electric Vehicles (EV), defense, and aerospace manufacturers such as Tesla, Rivian, Boeing, Lockheed Martin, and GE Aviation, is contributing to the market’s growth. Additionally, the high demand for semiconductor testing services across the computing and data storage equipment in the U.S. and Canada is positively impacting the growth.

Outsourced Semiconductor Assembly And Test Services Market Segmentations:

By Service Type

• Assembly & Packaging
  
  • Ball Grid Array Packaging
  • Chip Scale Packaging
  • Multi-chip Packaging
  • Stacked Die Packaging
  • Quad-flat & Dual-inline Packaging
• Testing

By Application

• Telecommunication
• Consumer Electronics
• Industrial Electronics
• Automotive
• Aerospace & Defense
• Others

By Regional

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
• Asia Pacific
  • China
  • India
  • Japan
  • Taiwan
  • South Korea
• South America
  • Brazil
• Middle East & Africa