This market research report was originally published at the Yole Group’s website. It is reprinted here with the permission of the Yole Group.
Market to grow in significance as data centers, in particular artificial intelligence (AI), HPC and autonomous vehicles increase high-performance demand.
The high-end performance packaging market is exhibiting strong revenue growth, driven by memory demand and heterogenous integration of chiplets.
As chip requirements become more advanced, the trend is to combine 2.5D and 3D interconnect platforms within the same package.
The 2024 High-End Performance Packaging report from Yole Group offers an in-depth analysis of the current technological landscape and emerging business opportunities. Stefan Chitoraga, Technology & Market Analyst for Semiconductor Packaging at Yole Group, explores key megatrends—such as AI, data centers, high-performance computing (HPC), and autonomous driving—to assess market needs and connect them to cutting-edge innovations.
High-end performance packaging is pushing the limits of performance, with chiplet integration driving advancements in AI. Take a seat and delve into the latest insights from Yole Group.
Complex technology drives ASP, revenue growth
Yole Group forecasts that the market will exhibit a healthy rate of growth over the next five years. Total high-end package unit volumes are projected to grow at a CAGR of 44% to 5.6 billion in 2029 from 627 million in 2023. The level of volume makes it somewhat of a niche market in the overall semiconductor space. In contrast, MEMs and other types of sensors are sold in much large quantities. However, because high-end packaging technologies are more complex, they carry much higher average selling prices (ASPs).
As a result, total revenue is forecast to grow to $28.4 billion in 2029, a CAGR of 37% from $4.3 billion in 2023.
3D stacking (3DS) technologies – HBM, 3DS, 3D NAND and CBA DRAM – together with silicon interposers are the biggest contributors, representing more than 70% combined market share by 2029. Revenue from the 3DS segment is expected to decrease in 2028 owing to market saturation expected around 2027, but it will likely recover in 2029. This indicates that 3DS is more exposed to market cyclability than 3D NAND, which is more immune to price crashes.
High-end performance packaging has been a niche market because it has primarily been used in telecom infrastructure equipment – less so in mobile because of the high ASPs. But there are three main megatrends set to drive up future demand:
- Data center networking, which requires complex packaging for switching, cryptocurrency mining, and Internet of Things (IoT) applications.
- HPC at server and workstation level, which requires advanced technologies to support big data applications including AI, virtual reality, augmented reality, and the metaverse.
- Autonomous vehicles, which will process large volumes of data to make AI-enabled passenger cars, robotaxis and autonomous driving possible.
Key players position for share of market growth
TSMC, Samsung and Intel along with leading OSATs like ASE, SPIL, JCET and Amkor compete in the 2.5D packaging segment; Samsung, SK Hynix, Micron and YMTC compete in 3D memory; and TSMC is the leader in 3D SoC, with Intel and Samsung expected to enter the business in the next few years.
Intel, Samsung and TSMC are the overall leaders in high-end performance packaging and key innovators. They each have the front-end capability and huge resources allowing them to develop new high-end packaging solutions, which are becoming closer to front-end.
An important difference is that TSMC and Samsung are winning the trust of big customers like AMD, Nvidia and Apple to use the technologies they develop internally, while Intel has been integrating its high-end packaging solutions into the products it develops and commercializes. But Intel recently started to offer its back-end solutions to customers and has now announced it will spin out its Foundry division into a separate subsidiary.
In low to mid-end advanced packaging, OSATs are the main players but when it comes to higher-end packaging technology, top OSATs are mostly involved with Ultra-High-Density Fan-Out (UHD FO) packaging, or mold interposers with redistribution layer (RDL) embedding Si bridges to interconnect dies. but they are not yet present substantially in manufacturing higher-end advanced packaging technology. Foundries and IDMs dominate and OSATs are involved only in final packaging and testing.
Trade war accelerates China’s independence drive
China has big ambitions in the market and the impetus to become independent has increased because of US restrictions on exports of advanced semiconductors and manufacturing equipment to the country. The restrictions were updated in October 2023 to include unilateral controls targeted at equipment below 16/14 nm nodes.
This means Chinese companies no longer have direct access to equipment from ASML and major US suppliers providing advanced GPUs have been forced to create less advanced versions to sell to China. In response, SMIC – the country’s largest foundry – is starting to develop more advanced nodes. IDM YMTC has introduced hybrid bonding, for instance, helping Jasminer put a DRAM die on a logic die in its X4 Q cryptocurrency miner. However, YMTC is expected to lose market share because of the US blacklisting and could cede its leading position to Japan’s Kioxia.
There is a lack of visibility into the pace of process node development in China, but there is evidence that domestic companies are adapting fast, even though they cannot manufacture the latest technology nodes.
“What’s for sure is that China is making huge efforts to develop its semiconductor industry; 15 years ago, Chinese OSATs were not involved in very complex packaging or dies. But now there are a lot of OSATs and a lot of activity. They are very good at developing fast and today they have started doing chiplet configuration, 2.5D and 3D interconnect types, so they are getting better and better. Some Chinese players are managing to somehow bypass the rules. ”
Stefan Chitoraga
Technology and Market Analyst, Semiconductor Packaging, Yole Group
Yole Group will continue to monitor the evolution of the high-end performance packaging technologies and related markets as this evolution responds to emerging customer demand.
Stay tuned for Yole Group’s latest semiconductor packaging analyses!
