Semiconductor Advanced Substrate Market

Semiconductor Advanced Substrate Market Analysis

The Semiconductor Advanced Substrate Market is expected to register a CAGR of 6.81% during the forecast period.

As the demand for IoT devices is increasing, it further drives the growth of advanced substrates in manufacturing IoT equipment. Further, the demand for consumer electronics and mobile communication devices drives electronics manufacturers to deliver more compact and portable products.

• IC packaging provides physical/mechanical support for the device and is also responsible for the interconnection between the chip and external terminal, such as the printed circuit board (PCB). The encapsulation helps in the prevention of physical damage and corrosion of the metallic parts. The type of package used in manufacturing IC depends on various parameters such as power dissipation, size, cost, and other requirements.
• The increasing trend of miniaturization is driving the demand for advanced packaging. The advent of 5G, which influenced the demand over the past few years, is expected to continue, as the use of FCBGA in 5G base stations and HPCs is increasing in countries that adopt communication technology worldwide.
• The consumer and industrial sectors are driving IoT demand globally, as the technology's rising use drives demand from both sectors. According to Ericsson Mobility Report, the number of IoT devices with cellular connections is expected to reach 5.5 billion by 2027, compared to 1.9 billion at the end of 2021.
• Further, by 2050, it is expected that there will be around 24 billion interconnected devices, with almost every object connected to IoT. Such a growing trend is propelling the demand for advanced substrates market over the forecast period.
• Vendors in the market are making strategic investments to stronghold their market presence. For instance, in Feb 2022, LG Innotek announced to spend KRW 413 billion (~USD 311.56 Million) on manufacturing flip-chip ball grid array (FC-BGA). Further, Compatriots Daeduck Electronics and Korea Circuit had previously announced spending plans of KRW 400 billion (~USD 301.61 million) and KRW 200 billion (~USD 150.78 million), respectively. Whereas, Samsung Electro-Mechanics, which already manufactures FC-BGA, last year announced another KRW 1 trillion (~USD 754 million) spending plan in the sector.
• Despite the effects of the COVID-19 pandemic, the global semiconductor market observed robust growth in the latter half of 2020, which continued in 2021 and 2022 as well. The industry was riddled with a high deficit and increasing demand, which led to a significant supply chain gap that was primarily attributed to the COVID-19 pandemic. The initial spread of the virus led to the shutting down or the reduction of foundry capacity utilization, fearing the decreasing demand for the chips across major sectors, like consumer electronics. The diminished output led to a global shortage of semiconductors as the demand increased despite the initial estimates by semiconductor foundries.

Semiconductor Advanced Substrate Market Trends

FC BGA to Hold the Major Market Share

• A flip-chip ball grid array (FC BGA) is an advanced ball grid array with similar characteristics to CBGA, but bismaleimide triazine (BT) resin is used in FC BGA instead of a ceramic substrate. This also results in the reduction of overall costs. The significant advantage of FC BGA is the shorter electrical pathways compared to other BGA types, which offer enhanced electrical conductivity and faster performance. The tin-to-lead ratio in an FC BGA is generally 63:37. An added advantage of FC BGA is that the chips used on the substrate can be realigned to the correct position without the flip-chip alignment machine approach.
• As the FC BGA has a smaller footprint and less inductance, it is highly suitable for applications like microprocessors, application-based ICs (ASICs), artificial intelligence (AI), and PC chipsets. Network devices (ASICs), data center servers, AI processors, graphic processing units (GPU), gaming consoles, and electric automotive (Infotainment/ADAS) are some of the emerging applications that are expected to increase the adoption of FC BGA during the forecast period. Also, the continuous advancements in end-user products are expected to drive the demand for processors with BGA packaging from OSATs.
• Moreover, in 2021, the demand from 5G base stations and high-performance computing (HPC) applications drove the demand for FC BGA. As the telecom infrastructure in many countries is transitioning to 5G, there are more 5G base stations. These changes are expected to present a massive opportunity for the segment to grow.
• Further, new acquisitions related to the end-user industries and new investments in setting up the factory are expected to drive the market. For instance, in July 2021, South Korean semiconductor company Simmtech Co Ltd via its Malaysian subsidiary, Sustio Sdn Bhd (Sustio), will invest RM 507.78 million (~USD 120 million) to set up its first factory in Southeast Asia at Penang's Batu Kawan Industrial Park, which will further boost the studied market.
• FC-BGA on a high-density semiconductor package substrate enables large-scale high-speed integration (LSI) chips with more functionalities. Therefore, with the increasing demand for LSIs, automotive SoC, and high-end processors in servers, AI, networking device applications, and gaming devices, vendors are actively planning to increase their capacity for the FC BGA.
• For instance, in June 2022, Samsung Electro-Mechanics announced to invest of an additional KRW 300 billion (~USD 225 million) in flip chip ball grid array substrates. The investment will be used in Busan Sejong sites and FC-BGA facilities in the Vietnamese production plant to increase the company's production capacity.

Asia-Pacific to Hold Significant Market Share

• Asia-Pacific holds a prominent share of the market due to a significant number of semiconductor manufacturing operations in the region. The pure-play manufacturers operating in the region are increasing their production capacity to cater to the growing demand from fabless vendors. China is also trying to consolidate its substrate manufacturing market.
• Apart from domestic manufacturers, such as Shennan Circuits Company, the country is home to various IC substrate manufacturing facilities operated by other major vendors, such as AT&S, ASE Group, and many more. In August 2021, China's PCB maker Dongshan Precision Manufacturing announced its plans to invest CNY1.5 billion (~USD 209 million) in establishing a new wholly-owned subsidiary dedicated to the production and sale of IC substrates.
• Further, in June 2021, Shennan Circuits, a printed circuit board maker, announced its plans to invest CNY 6 billion (~USD 837 million) to build a factory in Guangzhou to meet a growing IC packaging demand. The new plant would be able to make more than 200 million flip chip ball grid array packages per year, as stated by the company.
• The growing emphasis on the semiconductor industry by the government of China is leading to an increase in demand for advanced IC substrates. The country has an aggressive growth strategy to meet 70% of China's semiconductor demand with domestic production by 2025. In addition, the 14th Five-Year Plan (2021-2025) for technology independence also supports the goal set by the government.
• The semiconductor sales of the nation are witnessing an uptrend. According to Semiconductor Industry Association, China remained the largest individual market for semiconductors, with sales of USD 192.5 billion in 2021, an increase of 27.1% from last year.

Semiconductor Advanced Substrate Industry Overview

The semiconductor advanced substrate market is semi-consolidated. An increase in technological advancements across regions provides lucrative opportunities in the market. Overall, the competitive rivalry among existing competitors is moderate. Moving forward, acquisitions and partnerships of large companies are focused on innovation. Some of the key vendors operating in the market are TTM Technologies, Samsung Electro-Mechanics, AT&S, and Nippon Mektron.

In February 2023, Samsung Electro-Mechanics developed an automotive semiconductor substrate that applies to advanced driver assistance systems and will expand its lineup of high-end automotive semiconductor substrates. The newly developed FCBGA is a substrate for high-performance autonomous driving ADAS systems and one of the most technically challenging products in the automotive industry.

In February 2023, TTM Technologies, With its announcement of the largest release to date by introducing 0603 (1.5 mm x 0.7 mm wide and broadband couplers and Balun transformers, RF&S has further extended its product offering for radio frequency and specialty components. These new products have been specially designed for 5G wireless transceivers and power ampoules that offer superior performance with a low total cost solution, thanks to the Xinger brand's reliability.

Semiconductor Advanced Substrate Market Leaders

Semiconductor Advanced Substrate Market News

• February 2023 - TTM Technologies announces exhibit at the 2023 International Electronics Circuit Exhibition (Shenzhen), at Booth in the Shenzhen World Exhibition & Convention Center (Bao'an), in China, Where TTM will be hosting a series of technical seminars to present its cutting edge engineering and product solutions aimed at dealing with customer problems across different end markets and applications.
• November 2023 - AT&S announced that it is providing IC substrates for global semiconductor company AMD. Substrates by AT&S are an integral part of high-performance, energy-efficient AMD data center processors that power the digital experiences of the future, from AI to VR.