Packaging Materials Market Trends, Issues and Opportunities Part 2: Material Supply Base Observations
By Jan Vardaman, TechSearch International, and Dan Tracy, SEMI
In our previous article on the Global Semiconductor Packaging Materials Outlook report, we discussed how new packaging form factors have enabled the rapid growth in mobile electronics with an accompanying increase in product functionality. Materials are a key enabler to increasing the functionality of thinner, smaller packages; and going forward in our industry, we see Fan Out Wafer-Level Packaging (FO-WLP) emerging as a disruptive technology impacting the packaging materials market. FO-WLP is disruptive technology because there is no substrate and thin-film metallization is used for interconnect instead of bumps or wires.
In 2015, industry consolidation and merger & acquisition activity emerged as a hot topic; and the packaging materials market segment has not been immune to this trend. Changes in material sets, emergence of new package types, and cost reduction pressure have resulted in recent consolidation in different material segments, especially for leadframes, bonding wire, and molding compounds.
SEMI and TechSearch continue to track over 200 packaging material suppliers across the world, both global players and more regionally-focused players. New suppliers have entered the market in recent years, some in Korea and, more recently, China-headquartered suppliers.
Over the past decade semiconductor packaging industry segment in China has experienced rapid growth, including China-headquartered packaging subcontractors. In 2012, the National Center for Advanced Packaging (NCAP China) was registered with a goal of leading the development of advanced technologies for microelectronics packaging and system integration in China. The R&D mission of the center is to develop and introduce advanced packaging technology. In 2014, the China National Guideline target for the China IC Industry was published. Guideline objectives include that China-headquartered packaging subcontractors grow their revenue share based on mid- and high-end packages and, by 2020, provide leading-edge packaging solutions to the global market. The National Guideline also directs that China-headquartered material suppliers enter the global supply chain.
So, domestic packaging materials suppliers in China are targeting to grow with the industry and some are now supplying international packaging subcontractors. In the immediate term, these subcontractors, and some IDMs, are evaluating China-based suppliers to realize lower materials costs, though suppliers target to provide leading-edge material solutions going forward.
Our report survey has tracked the growth in market share — in some material segments — for the China-headquartered packaging material suppliers. The combined shares of these suppliers in each segment represents a small share of the total worldwide market, though sales are growing. For leadframes, revenues of the China-headquartered suppliers grew at an estimated 16 percent CAGR from 2010-2014 compared to a 0.5 percent CAGR for overall leadframe revenues. Overall market share is increasing for the China-headquartered bonding wire suppliers as domestic manufacturers ramp copper and silver bonding wire production. The share of China-headquartered mold compound suppliers remains small as current products are consumed in legacy IC and discrete products. Applications in advanced packaging require newer resin formulations, so China suppliers will need to develop sources for such materials.
Estimated Sales Trend Data for China-headquartered Packaging Material Suppliers
Leadframe Sales (US$ M)
% Share of World Total
Bonding Wire Shipments
% Share of World Total
% Share of World Total
Source: SEMI Industry Research and Statistics, December 2015
China-headquartered material suppliers are strengthening collaborations with leading packaging houses, seeking partnerships with overseas suppliers, and participating in domestically funded research programs to enhance their competitive power, to grow their sales, and to improve their marketing channels.
All of the information in this article is from the soon-to-be released Global Semiconductor Packaging Materials Outlook—2015-2016 Edition, produced by SEMI and TechSearch International. In developing this report, over 150 in-depth interviews were conducted with semiconductor manufacturers, packaging subcontractors and packaging materials suppliers throughout the world.
TO ORDER YOUR COPY of Global Semiconductor Packaging Materials Outlook—2015-2016 Edition, please contact Dr. Dan P. Tracy, research development director, Industry Research and Statistics, SEMI via email at firstname.lastname@example.org, or telephone 1.408.943.7987 or click here for sample, pricing, and ordering information.
February 23, 2016