The advanced packaging in the semiconductor testing industry welcomes a great year, with strong orders for ASE, King Yuan Electronics, and Powertech

[Written by Wu Min-Zhen]

With the vigorous development of edge AI applications, the market is optimistic that the demand for packaging and testing will remain high; Taiwanese manufacturers have been actively deepening advanced packaging technologies in recent years, which will continue to provide advantages in high-end chip fields such as AI and GPU.

Under the technological transformation of artificial intelligence (AI), the global semiconductor industry has immense growth potential. According to the latest research by IDC (International Data Corporation) on "Global Semiconductor Supply Chain Tracking Intelligence," due to the continuous rise in global demand for AI and high-performance computing (HPC) by 2025, all major application markets, from cloud data centers and end devices to specific industry categories, are facing a trend of specification upgrades. The semiconductor industry is set to welcome a new era of prosperity. It is estimated that by 2030, the global semiconductor market will grow to one trillion dollars.

Demand for Packaging and Testing Remains Strong

Among them, as the AI semiconductor market grows rapidly, the importance of packaging and testing is also increasing. Market research firm Fairfield predicts that the semiconductor packaging market is expected to continue growing at a rate of over 10% annually, expanding to $90 billion (approximately NT$2.9 trillion) by 2030.

Recently, with the emergence of DeepSeek, the market also anticipates that it will accelerate the popularization of edge AI, which will continue to drive the demand for packaging and testing to remain high.

Although IDC pointed out that under the influence of geopolitical factors, the global packaging and testing landscape is being reshaped, with China rapidly growing its wafer foundry capacity under the "semiconductor self-sufficiency" policy, and the downstream OSAT industry expanding accordingly, forming a complete manufacturing industry chain; however, Taiwanese manufacturers are demonstrating another aspect of industrial advantage in this situation. They are not only accelerating the layout of production capacity in Taiwan and Southeast Asia but also deepening advanced packaging technologies for AI chips, consolidating their advantages in packaging high-end chips such as AI and GPU.

In recent years, as transistor miniaturization technology approaches its limits, the further extension of Moore's Law is also facing challenges. Heterogeneous integration packaging technologies such as flip chip, fan-out panel-level packaging (FOPLP), 2.5D packaging, and 3D IC have become areas of continuous development for Taiwanese manufacturers According to research firm Yole Group's estimates, by 2025, the advanced packaging market share will officially exceed that of traditional packaging, reaching 51.03%, indicating the increasing importance of advanced packaging in the semiconductor industry, with strong growth.

Recently, ASE Technology Holding Co., Ltd. announced at a conference that after ten years of investment in FOPLP, the group has decided to invest $200 million (approximately NT$6.6 billion) to establish a FOPLP production line at its Kaohsiung plant, with equipment expected to arrive in the second quarter and trial production starting in the third quarter. ASE Group has been investing in FOPLP research and development for ten years and currently has a production line for 300×300 panel-level packaging using Fan-Out technology, primarily applied in power management chips or automotive-related products.

The company stated that traditional wafer sizes have become a bottleneck for AI hardware development, and there is a high market demand for Large Panel packaging. In response, ASE Technology Holding Co., Ltd. is further expanding the size to 600×600 and expects that if progress goes smoothly, it will become a mainstream specification.

ASE and King Yuan Electronics Strong Order Intake

In addition, ASE Technology Holding Co., Ltd. has invested $300 million (approximately NT$9.6 billion) in its fifth factory in Penang, Malaysia, which will target AI, robotics, and autonomous driving opportunities, becoming the group's focus for advanced packaging layout. The company expects that by 2025, advanced packaging and testing revenue will account for 10% to 15% of total ATM revenue, higher than the previous estimate of 10%, indicating the company's confidence in the growth of AI-related businesses. At the same time, the company is optimistic that advanced testing will account for 15% to 20% of advanced packaging revenue. Additionally, Taiwan Semiconductor Manufacturing Company (TSMC) will outsource part of its OS (back-end packaging services) to ASE Technology Holding Co., Ltd., which will also help the company achieve its goal of doubling advanced packaging revenue.

Last year, Powertech Technology Inc. reported an EPS of NT$9.09, a year-on-year decrease of 15.2%, marking a new low in four years. Looking ahead to this year, the company stated that order levels in the first quarter are lower than the previous quarter, but a significant recovery is expected starting in the second quarter, with AI applications standing out. The group will continue to increase the proportion of AI-related products, hoping to contribute more revenue than last year's 8%. At the same time, the proportion of logic product packaging and testing is steadily rising, and advanced packaging will be the next wave of growth momentum.

The company is actively laying out advanced packaging technologies such as FOPLP, CIS sensors, AI chips, and CoWoS to respond to the rapid growth of AI. Powertech Technology Inc. has the technical capability for silicon interposer packaging alternatives and was one of the first packaging companies to invest in advanced FOPLP packaging years ago. By overcoming technical and yield bottlenecks, it can provide excellent performance, capacity, and cost advantages, with several manufacturers already collaborating. [This article is not finished; for the full details and charts, please refer to "Investment Weekly" Issue 2341.]

For the full text and charts, please refer to "Investment Weekly" Issue 2341.

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