The advanced semiconductor packaging market is estimated to be valued at USD 38.46 Bn in 2024 and is expected to reach USD 66.10 Bn by 2031, growing at a compound annual growth rate (CAGR) of 8% from 2024 to 2031. The advanced semiconductor packaging market is expected to witness significant growth owing to rising demand for cloud computing and artificial intelligence across various industry verticals.

Market Driver - The Push for Smaller, More Powerful Electronic Devices

In today's technology driven world, the demand for smaller and yet more powerful electronic devices is growing at an immense rate. Consumers constantly want electronic products with slimmer and thinner designs. The semiconductor industry is under tremendous pressure to deliver on these expectations by adopting miniaturization of semiconductors and components down to nanoscale level.

Advanced semiconductor packaging technology integrates greater number of chips and passive devices in the limited real estate available on the electronic boards. This helps manufacturers achieve the desired small form factors for smartphones, tablets, laptops, wearable devices, and other consumer electronics prized by customers globally.

Moreover, sophisticated wafer level and flip chip packaging techniques facilitate the use of fan-out technology, thin, and ultra-thin form factors in the devices. Going forward, the advanced semiconductor packaging market is expected to witness rising sophistication and variety of new generation consumer gadgets. This will continue fueling the need for even higher density of semiconductors in limited space.

Market Driver - Proliferation of Internet of Things (IoT) Devices and the Rollout of 5G Networks

The world is seeing massive growth of internet connectivity worldwide and evolution of high bandwidth 5G networks. The advanced semiconductor packaging market is set for exponential proliferation of internet of things devices in the coming years. The futuristic vision of connected homes, cities, industries, and societies is slowly becoming a reality now, which proves to be an important driver for the advanced semiconductor packaging market.

There is a need for compact system-in-package (SiP) form factors that can seamlessly integrate various sensors, controllers, memory and wireless modules with protection against environmental factors like moisture, dust and vibration. Similarly, applications such as autonomous vehicles and industrial robotics pose thermal challenges due to localized heat generation. This highlights need for advanced semiconductor packaging techniques like flip chip and wafer level packaging.

Furthermore, the high bandwidth requirements of 5G networks can support massive connectivity of IoT nodes generating huge volumes of data. This drives the need for heterogeneous multi-die integration technologies to deliver the needed compute power and memory resources. This will provide a push to growth of the advanced semiconductor packaging market.

Market Challenge - Implementation of Cutting-Edge Packaging Methods can be Cost-prohibitive

While advanced packaging techniques offer numerous benefits such as increased performance, power efficiency, and form factor miniaturization, the implementation of cutting-edge packaging methods can be cost-prohibitive for some manufacturers. Transitioning fabrication lines and production processes to newer packaging technologies requires significant capital investments that not all companies may be able to afford. There are considerable expenses associated with upgrading machinery, tooling, workforce training, and securing relevant packaging material suppliers that are capable of supporting newer methods. Additionally, yields for newer technologies may be lower during initial production ramps, leading to increased costs. This prevents some players, particularly smaller manufacturers and those in price-sensitive markets, from being early adopters of the latest packaging innovations. To justify the costs, substantial business cases need to be proven in terms of addressing large and high-value market opportunities. This challenge of high initial investment costs poses a barrier to technology migration for segments of the advanced semiconductor packaging industry.

Market Opportunity - Increased Use of Electronics in Vehicles Boosts Opportunities for Advanced Semiconductor Packaging

The automotive industry is witnessing higher electronics content in vehicles with the adoption of advanced driver-assistance systems, infotainment features, and connectivity functionalities. Advanced semiconductor packaging plays a crucial role in enabling these in-car electronics and technologies by offering capabilities such as increased functional integration, lowered power consumption, enhanced reliability, and space-saving multi-chip interconnections.

Automakers continue to incorporate more sophisticated electric and autonomous driving features in future vehicles. Hence the demand is expected to rise significantly for advanced semiconductor packages that can operate under stringent automotive quality and reliability standards.

The growing requirements for advanced logic and memory chips in applications like advanced driver-assistance systems, digital instrument clusters, and electric vehicle powertrains provides substantial opportunities for semiconductor packaging firms to engage with automotive OEMs and component suppliers. Semiconductor companies well-positioned to provide packaging solutions for applications in automotive electronics can capture a major share in advanced semiconductor packaging market.

Focus on 3D/2.5D IC Packaging: Most leading players in the advanced semiconductor packaging market have been heavily focusing on developing advanced 3D and 2.5D packaging technologies to meet the increasing demand from industries like computing, mobile, connectivity etc. For example, Intel launched its Embedded Multi-die Interconnect Bridge (EMIB) technology in 2017, which allowed for 2.5D packaging.

Partnerships with Foundries for Advanced Node Development: Many packaging players have partnered with leading semiconductor foundries to gain early access to advanced process nodes and co-develop innovative packaging technologies. For example, Amkor has partnerships with Samsung, GlobalFoundries for advanced fan-out and 2.5D/3D IC packaging.

Focus on Emerging Applications: Leading players closely monitor emerging areas like artificial intelligence, 5G, autonomous vehicles etc. and develop application-specific advanced packaging solutions to gain early mover advantage. For example, in 2019, Intel launched its Embedded Multi-die Interconnect Bridge (EMIB) solutions optimized for AI and connectivity applications.

Insights, By Packaging Type: Technology Innovation Drives Flip Chip Packaging Adoption

In terms of packaging type, flip chip packaging is projected to account for 39.8% share of the advanced semiconductor packaging market in 2024. This is due to continuous technology innovation bringing greater functionality and efficiency. Flip chip technology provides the highest input/output connection density due to its short interconnects between the silicon die and package substrate.

The flip chip design also helps manage signal performance better as it reduces parasitic resistance, capacitance, and inductance compared to older packaging approaches. Semiconductor foundries and packaging houses have been consistently shrinking the smallest geometric element in flip chip interconnects, enabling more connections in the same area.

Recently developed bumping technologies like copper pillar bumping are gaining prominence due to their enhanced electrical and thermal properties compared to traditional tin-lead and solder bumping. The ability to achieve new functionalities through innovation is expected to sustain the strong demand for flip chip packaging.

Insights, By Application: Processor/Baseband Segment Leads due to Increasing Demand for Connectivity and Computing Power

In terms of application, processor/baseband segment is expected to 36.2% share of the advanced semiconductor packaging market. It is driven by intensifying demand for connectivity and computing capabilities. Processor packages are increasingly being designed for integration of modem functions onto the same package to support emerging connectivity solutions.

Fan-out packaging techniques are widely adopted as they allow modem components to be placed very close to the Application Processor (AP) cores, minimizing interconnections length and power consumption. Additionally, growth in applications such as artificial intelligence, Internet of Things (IoT), autonomous vehicles etc. is propelling the need for higher performance processors and accelerators.

Advanced chip packages that allow for 3D stacking of logic die and High Bandwidth Memory (HBM) bring major improvements in processing power and memory bandwidth to enable such emerging applications. The growth momentum of connectivity and AI driven sectors is influencing design strategies of chipmakers and fueling the Processor/Baseband segment.

Insights, By End-user Industry: Miniaturization Drives for Consumer Electronics Segment in Advanced Semiconductor Packaging Market

In terms of end-user industry, consumer electronics contributes the highest share of the advanced semiconductor packaging market driven by continuous demand for miniature form factors. Consumer devices such as smartphones, tablets, wearables and other gadgets require aggressive miniaturization to support sleek designs preferred by end users.

Advanced semiconductor packaging plays a critical role in enabling miniaturization by integrating multiple semiconductors die or packages in a limited footprint through 3D integration schemes. Fan-out wafer level packaging (FOWLP) delivers ultra-thin packages with multilayer redistribution and shorter interconnects. FOWLP is gaining adoption for RF and imaging sensing modules in addition to Application Processor (AP) packages.

Further, 3D TSV based stacking helps integrate memory, power management ICs and other components very near to AP die for compact motherboard designs. Continued innovation in integration capabilities will expand advanced semiconductor packaging applications over the coming years in line with evolving end user requirements.

• Asia-Pacific Region Dominance: Holding over 50% of the advanced semiconductor packaging market share, the Asia-Pacific region leads due to the presence of major semiconductor manufacturers and high consumer electronics demand.
• Consumer Electronics Leading Segment: Accounts for approximately 40% of the advanced semiconductor packaging market share, driven by the continuous demand for advanced smartphones and wearable devices.
• The adoption of 2.5D and 3D IC Packaging is significantly improving the performance of high-end computing systems by enabling greater integration and bandwidth.
• Fan-Out Wafer Level Packaging is increasingly used in smartphones to reduce package size while enhancing thermal and electrical performance.

The major players operating in the advanced semiconductor packaging market include Advanced Micro Devices, Inc., Intel Corporation, Hitachi, Ltd., ASE Technology Holding Co., Ltd., Amkor Technology, STMicroelectronics, Infineon Technologies, Sumitomo Chemical Co, Ltd., KYOCERA CORPORATION, Taiwan Semiconductor Manufacturing Company Limited, Advanced Semiconductor Engineering, Inc., and Samsung Electronics Co., Ltd.

• In July 2024, Samsung Electronics established a team focused on developing high-bandwidth memory (HBM), which is critical for AI devices. This team was part of a broader reorganization within Samsung’s semiconductor division aimed at consolidating research and development functions.
• In July 2024, Resonac Corporation, along with a consortium of five U.S.-based companies, launched an initiative called "US-JOINT" aimed at advanced semiconductor packaging R&D. The consortium focuses on next-generation advanced semiconductor packaging technologies, such as 2.5D and 3D, for applications like AI and autonomous driving.

• By Packaging Type
  • Flip Chip Packaging
  • Fan-Out Wafer Level Packaging
  • Fan-In Wafer Level Packaging
  • 5D/3D IC Packaging
  • System-in-Package (SiP)
• By Application
  • Processor/Baseband
  • Central Processing Units/Graphical Processing Units
  • Dynamic Random Access Memory
  • NAND
  • Image Sensor
• By End-user Industry
  • Consumer Electronics
  • Automotive
  • Telecommunications
  • Healthcare
  • Aerospace & Defense