Growing usage of consumer electronic products such as smartphones and tablets has boosted the demand for advanced packaging technologies, which, in turn, has created a potential revenue opportunity for the global semiconductor assembly and testing services (SATS) market. Rising adoption of safety systems across the automobile industry has further propelled the growth of the global SATS market. The market is estimated to expand at a CAGR of 4.7% during the period between 2015 and 2021 and reach a valuation of US$39 bn by the end of 2021. The overall market was worth US$29.6 bn in 2015.
OSAT Services: The First Choice of Integrated Device Manufacturers
It has been observed that in the global SATS market, there is a growing demand for outsourced services. In fact, more than 50% of the market is accounted for by outsourced services. The trend of utilizing outsourced semiconductor assembly and test (OSAT) services is expected to continue in the long run. Additional features offered by SATS providers over in-house testing services are expected to further fuel the demand from the market. Further, SATS providers facilitate a more efficient supply chain and are hence preferred by integrated device manufacturers (IDM). However, high capital requirement for offering high-end packaging solutions, volatility in the market, and fluctuations in exchange rates are expected to restrain the overall market.
Strategic Alliances between Key Players to Revolutionize Global SATS Market
Some of the prominent names in the global SATS market are ASE Group, STATS chip PAC Ltd., Silicon Precision Industries Company Ltd., Amkor Technology Inc., Powertech Technology Inc., Chipbond Technology Corporation, CORWIL Technology Corp., Global Foundries Inc., and Integrated Microelectronics Inc. While many of the low-end SATS providers are competing on price-driven products, the key players in the market are focussing on gaining the competitive edge by targeting advanced expensive packaging solutions that would address the growing demand for low power requirements and miniaturization. For example, STATS chip PAC Ltd. developed an innovative FlexLine manufacturing line in May last year. The manufacturing line can process multiple silicon wafer diameters and produce both fan-in and fan-out wafer level packages on it.
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The market is witnessing a number of strategic alliances and collaborations among the key players owing to growing financial pressures. This month, Amkor Technology Inc. announced that it has acquired a 100% stake in J-Devices Corp., a Japan-based semiconductor assembly and testing services company. In October 2009, Amkor partnered with Nakaya Microdevices Corp. and Toshiba Corp. to acquire the assembly and test operations of Toshiba to form J-Devices. In Japan, J-Devices is now the largest outsourced semiconductor assembly and test provider and the sixth largest across the globe. Acquiring J-Devices will strengthen Amkor’s relationships with the prominent semiconductor companies in Japan and will boost its position in the automotive market. In the fourth quarter of 2015, Amkor has reported a dip in its revenue. J-Devices had a net income of US$30 mn for the year 2015.