Summary

The Global 2.5D & 3D Semiconductor Packaging Market is expected to register a CAGR of 16.2% during the forecast period (2022-2027). As 5G, AI, and high-performance computing continue to make inroads into the world, there's an escalating demand for semiconductor devices that deliver enhanced performance, lower latency, increased bandwidth, and power efficiency, achieved by 2.5D & 3D packaging technologies. In recent years, 2.5D & 3D has gained momentum as an ideal chiplet integration platform due to their merits in attaining extremely high packaging density and high energy efficiency.

Key Highlights
Various semiconductor ICs are being deployed in multiple industries such as automotive, consumer electronics, and others. For instance, the advent of IoT and artificial intelligence (AI) and the proliferation of sophisticated electronics are driving the high-end application segment across the consumer electronics and automotive industries. As Packaging is an early stage in the electronics value chain, the growth of the market studied is directly impacted by the semiconductor market's growth.
There are several advantages of applying 2.5D & 3D IC Packaging, including Ultra-high routing density, Ultra-high I/O density, Homogeneous/heterogeneous memory, power and optics integration, Interposer capable of embedding decoupling capacitor or active devices feasible, package reliability to meet automotive requirements, etc.
As the semiconductor applications are expanding, the slowdown in CMOS scaling and escalating costs have forced the industry to rely on IC packaging advancement. 3D stacking technologies have emerged as lucrative solutions that meet the required performance of applications like AI, machine learning, and data centers. Therefore, the growing need for high-performance computing applications drives the 3D-TSV (Through Silicon Via) market over the forecast period.
Further, a pandemic like COVID-19 is anticipated to fuel the manufacturing of advanced medical devices and equipment to tackle such crises in the future. For instance, in 2021, GE Healthcare announced that it would increase its manufacturing capacity for medical equipment, including CTs, ultrasound devices, mobile X-ray systems, patient monitors, and ventilators, to cater to the ongoing challenge of treating COVID-19 patients. Since the 2.5D & 3D Semiconductor Packaging has numerous applications in the medical industry, the proliferation of medical equipment manufacturing is expected to drive market growth.
However, the high Initial Investment and Increasing Complexity of Semiconductor IC Designs are expected to restrain the evolution of the market.


Key Market Trends

The Consumer Electronics Segment is Expected to Hold a Major Market Share


Consumer electronics is one of the primary end-user industries for semiconductor vendors. Growth in the smartphone industry, increasing adoption of smart devices and wearables, and increasing penetration of consumer IoT devices in applications like smart homes are significant factors driving the growth of the studied segment. For instance, according to Ericsson, worldwide smartphone subscriptions were 5924 million in 2020 and 6259 million in 2021. It is projected to reach 6567 million in 2022 and 7690 million in 2027.
The consumer electronics industry demands higher power dissipation, faster speeds, higher pin counts, smaller footprints, and lower profiles. The miniaturization and integration of semiconductors have given rise to smaller, lighter, and more portable devices. Each new iteration of consumer electronics products is more innovative, lightweight, and energy-efficient than its predecessors. This creates enormous customer expectations for the next iteration, which is a significant selling point for the producers of consumer electronics. The 2.5D & 3D Semiconductor Packaging technologies serve to satisfy the complex and evolving needs of the consumer electronics market.
With trends like 5G smartphones, biosensors, and more AI features, the market is expected to witness increased smartphone sales in 2022. The deployment of 5G smartphones would also greatly enhance the wireless data communication bandwidth, latency, and density of connected devices. Further, markets like smartwatches and smart speakers gained massive popularity in recent years, owing to their increasing number of functionalities and features with the help of advanced semiconductor components. Thus, the demand for Wi-Fi and Bluetooth chips skyrocketed.
Moreover, the growing market for gaming consoles and increasing advancement in these products further expand the studied segment's scope. Over the 4-5 years, gaming console has become high-tech gadgets, and companies like Sony, Microsoft, and Nintendo are increasingly investing in their product development to reach the current 8th generation consoles.
Nowadays, these products utilize high technologies, including Blu-ray, motion sensing, VR, 4K and HD quality video, and online functions. Therefore, these applications need chips with an advanced substrate and added functionality, motivating the studied market vendors to invest in the segment. Such developments provide lucrative opportunities for the growth of the studied market.


The Asia Pacific Region is Expected to Witness a High Market Growth Rate


The increasing smartphone adoption rates have made Asia-Pacific one of the largest mobile markets in the world due to factors such as rising population, increasing disposable income, and growing urbanization. For instance, according to the Ministry of Industry and Information Technology (MIIT), in 2020 and 2021, there were around 112 and 116 mobile phone subscriptions per one hundred inhabitants in China, respectively. The increasing smartphone penetration rate in the region is a significant growth driver for the studied market.
Memory is a crucial market in modern data-centric societies, fueled by important megatrends, such as mobility, cloud computing, AI, and the IoT. The ramp-up of Chinese memory, the growth of flip-chip DRAM, and 3D-stacking technologies unlock significant opportunities for packaging players.
Additionally, the region is projected to witness rapid growth due to the increased demand for miniaturized circuits and the presence of established semiconductor manufacturing companies, OEMs, and ODMs.
Moreover, countries in the region have embarked on reorganizing supply chains in ways that prioritize their own needs, making them resistant to fierce competition. The region is also making preemptive investments to strengthen its domestic industry ecosystem further, so external shocks cannot shake it.
For instance, in May 2021, South Korea announced a plan to spend USD 450-billion over the next ten years on new semiconductor manufacturing capabilities. Semiconductors are Korea’s largest export, and most of it is memory products—DRAM and NAND Flash memory. The new plan aims to boost the nation’s advanced logic chip foundry capacity.


Competitive Landscape

The Global 2.5D & 3D Semiconductor Packaging Market is a fragmented market owing to the presence of various significant players like ASE Group, Amkor Technology Inc., Siliconware Precision Industries Co. Ltd (SPIL), etc. The market players are under a constant obligation to innovate advanced and comprehensive products to stay relevant in the market.


June 2021 - Taiwan's prominent semiconductor foundry, TSMC, announced its plans to establish an R&D center in Japan's science city of Tsukuba to develop 3D IC packaging materials in cooperation with its Japanese suppliers. In May 2021, Japan's Ministry of Economy, Trade, and Industry (METI) and its subsidiary organization, the National Institute of Advanced Industrial Science and Technology (AIST), announced that more than 20 Japanese companies would work with TSMC Japan's 3D IC R&D Center.
July 2021 - Singapore's Agency for Science, Technology, and Research (A*STAR's) Institute of Microelectronics (IME) announced a collaboration with four significant industry players to form a System-in-Package (SiP) consortium. IME would team with Asahi-Kasei, GLOBALFOUNDRIES, Qorvo, and Toray to develop high-density SiP for heterogeneous chiplets integration that can meet the semiconductor industry's challenge 5G applications. The newly formed consortium will leverage IME's FOWLP/2.5D/3D packaging expertise.


Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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