Due to the continuous growth of the global semiconductor market and the strong demand for terminal electronic products, the domestic semiconductor packaging and testing industry has ushered in good development opportunities. How can the domestic semiconductor packaging and testing industry achieve high-quality and sustainable development? For a time, the semiconductor packaging and testing industry has become a hot topic again.

Three pillars of the global packaging and testing market

my country's semiconductor packaging and testing industry as a whole shows a stable development trend, with market sales revenue growing steadily. Data from the China Semiconductor Industry Association shows that in 2019, the domestic integrated circuit industry sales were 756.23 billion yuan, a year-on-year increase of 15.8%. Among them, according to statistics from the Packaging Branch of the China Semiconductor Industry Association, the sales revenue of the packaging and testing industry increased from 196.56 billion yuan in 2018 to 206.73 billion yuan, a year-on-year increase of 5.2%.

From a global perspective, the market share of mainland China's semiconductor packaging and testing industry is also gradually expanding, and the global influence of the industry is increasing. Relevant data show that in 2019, mainland China's semiconductor packaging and testing industry accounted for more than 20% of the global market, with significant market share growth. At this stage, the global semiconductor packaging and testing market presents a tripartite situation, with semiconductor packaging and testing companies from Taiwan, Mainland China and the United States occupying the vast majority of the market share.

The "warmth" in my country's semiconductor packaging and testing market has also caused many companies to make efforts in this field. The four leading domestic integrated circuit packaging companies - Changdian Technology, Tongfu Microelectronics, Tianshui Huatian and Jingfang Technology have continuously deepened their layout, strengthened research and development efforts in advanced packaging technology, and delivered outstanding results. According to relevant data, in the revenue ranking of the world's top ten packaging and testing companies in the second quarter of 2020, Changdian Technology, Tianshui Huatian and Tongfu Microelectronics ranked fourth, sixth and seventh respectively, with considerable net profit growth.

Since the packaging and testing industry has the characteristics of high customer stickiness, acquisitions between enterprises can bring long-term and stable business to the company. In recent years, there have been many mergers and acquisitions among global packaging and testing manufacturers, and a new round of reshuffle has occurred in the industry. For example, ASE acquired the packaging and testing manufacturer Silicon Products, and Amkor Technology achieved full control of the Japanese packaging and testing factory J-Device.

The reshuffle of the global packaging and testing industry has naturally "affected" domestic manufacturers, and domestic packaging and testing companies have also set off a merger and acquisition boom. The "mergers and acquisitions" among manufacturers can enable domestic packaging and testing companies to integrate more quickly into the supply chains of international manufacturers, thereby expanding overseas high-quality customer groups and strengthening technology accumulation.

In recent years, Changdian Technology has acquired Singaporean packaging and testing manufacturer STATS ChipPAC; Tongfu Microelectronics has signed an equity purchase agreement with AMD, and as the controlling shareholder jointly established an integrated circuit packaging and testing joint venture with AMD; Tsinghua Unigroup invested approximately US$600 million in Licheng Technology, becoming the largest shareholder of Licheng; Suzhou Goodtech completed the acquisition of 100% of the equity of Malaysian packaging and testing manufacturer AICS in two phases.

At present, the domestic semiconductor packaging and testing industry is booming. Driven by market demand and related policies, semiconductor production capacity has been gradually released, and investment enthusiasm in the semiconductor packaging and testing industry has also increased. Since 2020, many cities across the country have announced the implementation of new packaging and testing projects. Packaging and testing projects have blossomed in many places, involving multiple fields including third-generation semiconductors, power management chips, 5G, smart storage, and industrial processing servers.

my country's high-end advanced packaging and testing is still lagging behind

Although my country's packaging and testing industry has made certain progress, domestic manufacturers have rapidly accumulated packaging and testing technology through mergers and acquisitions, and the technology platform has basically synchronized with overseas manufacturers. However, from a global perspective, my country still has a long way to go to develop in the field of advanced semiconductor packaging and testing.

As Moore's Law gradually approaches the physical limit, advanced packaging technology will play an increasingly important role. Ma Shuying, director of the research institute of Huatian Technology (Kunshan) Electronics Co., Ltd., said that new fields such as smartphones, Internet of Things, automotive electronics, high-performance computing, 5G, and AI have put forward higher requirements for advanced packaging. Packaging technology is developing in the direction of system integration, high-speed, high-frequency, three-dimensional, and ultra-fine pitch interconnection.

Semiconductor giants such as TSMC are becoming leaders in advanced packaging technology. This year, TSMC integrated its 3D packaging technology platform and launched the 3DFabric integrated technology platform to meet the diverse needs of customers; Samsung demonstrated an advanced 3D chip packaging technology called "X-Cube" to provide customers with more advanced products; Intel released a new hybrid combination technology, involving multiple technical dimensions.

Globally, the competition around advanced semiconductor packaging and testing technology is becoming increasingly fierce, but there is still a large gap between the overall level of my country's packaging and testing industry and that of foreign countries. Xie Jianyou, chief scientist of SiP at Tongfu Microelectronics Co., Ltd.'s Packaging Research Institute, pointed out that in terms of advanced packaging, especially high-end advanced packaging (such as HPC and memory), my country is 2 to 6 years behind the most advanced international level.

In terms of packaging and testing technology, technical barriers between industries have made it more difficult to develop advanced technologies. Xie Jianyou said that high-end products related to HPC, memory and AI require high-end advanced packaging technology. However, these products are highly profitable, technically complex, and involve the core competitiveness of the country or company, making it difficult for other companies to get involved in related businesses. "Leading HPC companies represented by Intel and memory companies represented by Samsung design and produce related products themselves and will not outsource their business to wafer and packaging and testing companies." Xie Jianyou said.

In terms of packaging and testing equipment, currently almost all key equipment is monopolized by imported brands. Ye Lezhi, technical director of Beijing Zhongdianke Electronic Equipment Co., Ltd., said that Japan Disco currently monopolizes more than 80% of the world's key packaging equipment and is unique in the thinning machine and dicing machine markets. In the field of traditional packaging equipment, the localization rate of my country's equipment does not exceed 10%. "The packaging equipment industry has low attention, and lacks industrial policy cultivation and verification opportunities from packaging and testing customers." Ye Lezhi said.

In terms of packaging and testing materials, the core technology of domestic plastic packaging materials is relatively weak. Han Jianglong, chairman and general manager of Jiangsu Huahai Chengke New Materials Co., Ltd., once said that as a key supporting material for the semiconductor packaging and testing industry, the electronic-grade raw materials used in high-end epoxy plastic packaging materials have high performance requirements, so R&D and production costs are also high. However, due to the small market demand, this raw material is particularly dependent on imports. "Domestic packaging and testing companies are developing very fast, but domestic packaging materials cannot keep up with the pace of corporate development." He said.

Establish a healthy packaging and testing ecosystem as soon as possible

Globally, the packaging and testing industry has strong market demand and huge industrial potential. According to SEMI statistics, in the field of packaging equipment alone, the global market size has grown at an average annual rate of 6.9% in the past 10 years, and the market size is expected to exceed US$4.2 billion in 2020.

In the overall development process of the packaging and testing industry, domestic enterprises need to assume more responsibilities and provide more assistance for industry progress. Xiao Shengli, rotating chairman of the Packaging Branch of the China Semiconductor Industry Association, believes that domestic packaging and testing companies should uphold the concept of cooperation over competition, increase research and development and investment in domestic equipment and materials, and gradually improve test platforms. It is also necessary to further enhance technological innovation capabilities, increase talent training, and achieve interactive integration of upstream and downstream products, so as to achieve greater progress in the ever-changing market competition.

In terms of packaging and testing technology, our country still needs to tackle core technologies and occupy a place in the high-end product market through technological breakthroughs. Xie Jianyou pointed out that integrating industrial resources and establishing a healthy ecological industry chain are the keys for domestic companies to "stuck" in the field of advanced packaging and testing, or even to take the lead. In addition, it is also necessary to increase efforts to cultivate innovative talents and actively introduce professionals in this field.

In terms of packaging and testing equipment, it is also necessary to speed up the research and development process of domestic packaging equipment in the industry chain. In this regard, Xie Jianyou said that the industry should pay more attention to domestic equipment and materials, increase its research and development efforts, and broaden its application scope.

In terms of packaging and testing materials, companies across the entire industry chain should strengthen cooperation to address issues such as insufficient supply of raw materials. "Companies in the industry chain should join hands with each other and develop together, and some large packaging and testing companies and end users must play a leading role." Han Jianglong said.

While increasing investment in technology, equipment, etc., each packaging and testing company must also ensure that the verification window is always open. Han Jianglong believes that the industry should vigorously support domestic plastic sealing material suppliers and give domestic plastic sealing materials more opportunities to test and use, so as to enhance the core competitiveness of the entire industry chain.

In addition, Han Jianglong also said that relevant departments should strengthen guidance for the industry as a whole and ensure the safety of materials from the perspective of raw materials to form a benign ecological system in the supply chain.

As the integrated circuit industry develops toward application diversification and market fragmentation, advanced packaging and testing technology has become an important development trend in the packaging and testing industry. If you want to further develop in a technical field that is difficult to research and develop and full of international competition, it is particularly important to keep up with market demand and strengthen international cooperation.

Yu Xiekang, vice chairman of the China Semiconductor Industry Association, once emphasized that we must make full use of my country, the world's largest endogenous application market, take application leadership and application drive as the entry point and development direction, adhere to deeper and broader open cooperation, and achieve mutual benefit and win-win results.

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