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The Outsourced Semiconductor Assembly And Test (OSAT) Market market size is projected to increase by USD 23.06 billion, at a CAGR of 8.32% between between 2023 and 2028. The growth rate of the market depends on several factors, including advances in the packaging of chips, growing demand for miniaturization, and the increasing number of fabless semiconductor companies. Outsourced semiconductor assembly and test (OSAT) are vendors that provide specialized manufacturing and testing services to semiconductor companies. The OSAT services involve assembling, packaging, and testing integrated circuits (ICs), and other semiconductor devices.
The market growth and forecasting report includes key player's detailed analyses of the competitive landscape of the market and information about 20 market companies, including Aehr Test Systems, Amkor Technology Inc., ASE Technology Holding Co. Ltd., Chipbond Technology Corp., ChipMOS TECHNOLOGIES INC., Cohu Inc., Global Unichip Corp, Great Wall Technologies Pvt Ltd., HANA Micron Corp., Jiangsu Changdian Technology Co. Ltd., King Yuan Electronics Co. Ltd., Lingsen Precision Industries Ltd., Powertech Technology Inc., SIGURD MICROELECTRONICS CORP., Taiwan Semiconductor Manufacturing Co. Ltd., Teradyne Inc., Tongfu Microelectronics Co. Ltd., UTAC Holdings Ltd., and Walton Advanced Engineering Inc. Additionally, Amkor Technology Inc provides comprehensive OSAT solutions, encompassing wafer sort, bump services, packaging, as well as test and burn-in services, offering turnkey solutions for diverse semiconductor needs.
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Advances in the packaging of chips are notably driving market growth. Using 3D packaging, foundries can reduce the size of electronic products with the help of miniaturized ICs. Moreover, 3D packaging allows the stacking of intelligence centers, which further addresses the challenge of space constraints. Such packaging techniques encourage electronic device manufacturers to develop advanced products that are much smaller in size, consume less power, and have an overall reduced product cost. Organic-substrate-interposer technology is highly adopted due to its low costs compared with silicon interposer technology. Some highly efficient RF applications have been shown using live connectors. However, their effectiveness in the next-generation application is still being studied.
Further, TSV-efficient interconnect techniques are used as an alternative to wire-bond and flip chips to create 3D packages and integrated 3D circuits. The 2.5/3D IC technology uses TSVs, which enable increased circuit compression, performance, and volume performance. 3D ICs are piled directly on top of each other, with interconnections being made by matching bond areas with TSVs. It also has an application on CMOS image sensors. TSVs are built into the back of the image sensor to create interconnectors, remove wire bonds, and allow for reduced form factor and high-density interconnects. Such factors are expected to drive the market growth during the forecast period.
The increasing number of strategic partnerships and acquisitions is an emerging trend shaping market growth. In the ever-evolving outsourced semiconductor assembly and test market, companies are proactively engaging in strategic partnerships and acquisitions to fortify their presence across geographies, propel product development, gain access to cutting-edge technologies, and facilitate resource-sharing. This trend is indicative of the industry's dynamic nature, where collaboration and acquisition serve as essential growth strategies. Noteworthy examples include Aptos Technology's collaboration with Kaynes Semicon to establish a semiconductor packaging and testing facility, Foxconn Technology Group and HCL Group's joint venture to create an OSAT facility in India focusing on semiconductor design and test software.
Similarly, Amkor Technology Inc.'s partnership with GlobalFoundries to bolster the European supply chain for automotive semiconductor wafer production, and ASIP Technologies' joint venture with APACT in South Korea to establish a comprehensive OSAT facility in India by 2025, covering package design, bumping, assembly, testing, and dropship solutions. These strategic maneuvers are poised to significantly impact and contribute to positive growth in market trends during the forecast period.
The rising shortage of semiconductors is a significant challenge hindering market growth. The semiconductor industry is a highly volatile sector, which sees cyclical patterns that may witness an increase in profit margins and revenue, followed by a slump and retrenchments in the industry. This cyclical nature of the global semiconductor industry leads to the industry is highly volatile. Some examples of downturns that affect the outsourced semiconductor assembly and test market drastically are excess production capacity, rapid obsolescence of products, and rapid price erosion in digital ICs. These high fluctuations can often lead to excess inventory levels in times of low demand as well as low inventory levels in times of high demand.
Further, the average price of DRAM fell by 3%-8% due to the conflict between Russia and Ukraine in 2022. As a result, leading electronics manufacturers, such as Samsung Electronics Co. Ltd. and SK HYNIX Inc., decided to cut their investments in DRAM production and divert their resources toward the production of complementary metal oxide semiconductor image sensors. Thus, vendors of semiconductors must manage and maintain IC inventories to avoid monetary losses. These factors will negatively impact the growth of the market during the forecast period.
The market share growth by the assembly and packaging segment will be significant during the forecast period. The semiconductor industry is highly dependent on OSAT for performing tasks related to the final stages of production. This includes tasks such as sealing, wire bonding, encapsulation, and testing. The assembly services of semiconductor products is a highly dynamic industry, where vendors must make high R and D investments to stay competitive in the outsourced semiconductor assembly and test market.
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The assembly and packaging segment was the largest and was valued at USD 25.15 billion in 2018. OSAT companies are involved in designing and developing packages for semiconductor products, which can reduce the overall component size while retaining or even increasing efficiency and performance. OSAT offers advanced packaging technologies such as advanced system in package (SiP), wafer-level packaging, embedded die solutions, multi-chip modules, heterogeneous integration, three-dimension () through-silicon via (TSV) technology, and 3D IC. The rising demand for these high-end packaging solutions is accelerating the adoption of OSAT service by integrated device manufacturers (IDM), fabless companies and foundries. Moreover, the growing complexity in the semiconductor assembly and packaging process owing to the advancement in manufacturing nodes and the miniaturization of the ICs is expected to propel the growth of the segment during the forecast period.
OSAT companies have a pivotal role in the telecommunication industry by providing specialized expertise, and cost-effective, and customized services that are needed to produce high-quality semiconductor chips. These chips are essential for the operations of telecommunication networks and the development of new telecommunication devices and technologies. Telecommunication is constantly evolving with new technologies such as fifth-generation (5G), IoT, and edge computing, driving the need for advanced semiconductor chips. Therefore, OSAT companies help telecommunication companies stay at the forefront of the technologies by providing the latest assembly and packaging solutions. Further, the increasing deployment of 5G technology in communication is expected to drive the demand for OSAT to provide high-quality services for assembly, packaging and testing services. Thus, the telecommunication segment is expected to witness substantial growth in the market during the forecast period.
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APAC is estimated to contribute 58% to the growth of the global market during the forecast period. Technavio's analysts have provided extensive insight into the market forecast, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. There are a few key countries, such as Taiwan, South Korea, Japan, and China, which contribute significantly to market demand as they are the base for most of the major semiconductor device manufacturers due to the cheap labor costs and proximity to various raw material supply sources. In addition, the presence of end-user industries, especially those manufacturing consumer electronics and mobile devices, supports the demand for OSAT services in APAC. Moreover, the rising demand for miniaturized ICs is increasing from several end-user industries, such as consumer electronics, automotive, optical devices, and others, primarily due to advances in wired and wireless technologies, the growing implementation of IoT, increasing automation in these industries, has necessitated the need for OSAT vendors for providing assembly and packaging technologies.
In addition, the companies are heavily investing in the expansion of OSAT facilities to meet the growing demand for testing, assembly, and packaging of semiconductor products. For instance, in October 2023, Jiangsu Changjiang Electronics Technology Co., Ltd., a leading IC manufacturing and OSAT services provider in China, announced the expansion of OSAT facility capacity in the city of Jiangyin in China. Such expansion is expected to accelerate the growth of the regional market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
ASE Technology Holding Co. Ltd. - The company offers OSAT solutions for PC, communications, consumer integrated circuits markets under the brand Siliconware Precision Industries.
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
The global OSAT market is intricately linked to the semiconductor industry's dynamics, with semiconductor demand and chip manufacturing being pivotal aspects. OSATs (Outsourced Semiconductor Assembly and Test) play a crucial role in semiconductor product development by offering innovative and cost-effective solutions in IC packaging and testing. Key players like AMD and Nvidia leverage OSATs for their chip packaging and test services, essential building blocks for modern technology. As advancements in fields like AI, cloud computing, and high-speed, low-power integration drive significant sales, OSAT plants become integral for efficient downstream technologies. Key sectors like AI, automotive, and electronics influence the market, facing challenges and threats that impact capacity utilization and operations, necessitating stock adjustments for a balanced approach.
However, the market faces challenges, including declining demand in certain sectors like cloud services, influencing OSAT plants in the first half of 2023. The miniaturization trend, a major factor shaping the testing process, continues to impact the OSAT market, while vertical integration by key semiconductor manufacturers poses both opportunities and threats. The market's recent years have seen a shift toward core competencies, with large players focusing on control over front-end devices, and despite high expenditures, the OSAT market demonstrates resilience and a capacity for moderate recovery in the upcoming quarters.
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Outsourced Semiconductor Assembly And Test (OSAT) Market Scope |
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Report Coverage |
Details |
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Page number |
158 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 8.32% |
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Market Growth 2024-2028 |
USD 23.06 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
6.42 |
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Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 58% |
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Key countries |
US, China, Taiwan, South Korea, and Japan |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Aehr Test Systems, Amkor Technology Inc., ASE Technology Holding Co. Ltd., Chipbond Technology Corp., ChipMOS TECHNOLOGIES INC., Cohu Inc., Global Unichip Corp, Great Wall Technologies Pvt Ltd., HANA Micron Corp., Jiangsu Changdian Technology Co. Ltd., King Yuan Electronics Co. Ltd., Lingsen Precision Industries Ltd., Powertech Technology Inc., SIGURD MICROELECTRONICS CORP., Taiwan Semiconductor Manufacturing Co. Ltd., Teradyne Inc., Tongfu Microelectronics Co. Ltd., UTAC Holdings Ltd., and Walton Advanced Engineering Inc. |
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Market dynamics |
Parent market growth analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
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Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Service
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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