OSAT (Outsourced semiconductor assembly and test) refers to businesses that provide third-party IC packaging and testing services. Commercial providers make up OSATs. OSATs are also hired to handle a portion of integrated device manufacturers (IDMs) IC packaging needs and foundries with internal packaging operations. OSATs and foundries manage the packaging for fabless firms. The designs developed by semiconductor design firms like Intel, AMD, Nvidia, etc., are worked on by OSAT companies. Before putting silicon devices produced by foundries on the market, the company package and test them.
As per the research report by DataM Intelligence, Global Outsourced Semiconductors Assembly and Test Market size was valued at USD YY billion in 2021; it is projected to reach USD YY billion by 2029, with growth at a CAGR of 5.1% over the forecast period 2022-2029. Shipments for packages found in cell phones have been a major factor in the rise of OSAT over the past few years. The market for OSAT is driven by high power device growth and rising electronic content in automobiles. It primarily focuses on offering semiconductor companies cutting-edge packaging and test solutions in established sectors, including automotive electronics and the Internet of Things, as well as consumer, consumer and computing.
Semiconductors are the main component of modern technology. The global market for outsourced semiconductor assembly and testing services is expanding due largely to the rising demand for consumer electronics and increased connectivity in the automobile industry. The use of safety-based electronic systems in the car industry has exploded. Microcontrollers, sensors and memory are a few semiconductor components that will increase demand in the automotive industry. In the coming 10 years, automotive electronics and subsystems will contain more semiconductors due to automation, electrification, digital connection and security.
Due to technological complexity, the global market for outsourced semiconductor assembly and testing will grow slower throughout the forecast period. The semiconductor industry is extremely complicated and characterized by a high cost of updating and implementing new technology along the value chain. The complexity of OSAT requires expert labor, which is a challenge and could lead to business losses and closures.
It's no longer fiction that outsourced semiconductor assembly and testing are fully automated. Although the assembly and test sector has historically relied significantly on manual processes, the current situation completely disproves this assumption because of lower prices in eastern regions. The pressing need to embrace automation techniques is caused by the complexity of the current supply chain and the rising complexity of technology, products, equipment and processes. This adoption is accelerated by the exponential rise of automotive, smart computing, communication and Industrial Internet of Things (IIoT) content in the product mix. Last, contemporary processing and supply chain demands have made it difficult for humans to comprehend basic processing activities like lot selection and conveyance.
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The demand for semiconductors, in general, has increased significantly. In contrast, the supply has lagged because of the 2020–2021 pandemic, the ensuing global factory shutdowns, the push for online employment and the almost universal adoption of working from home. First off, the adoption of work-from-home policies led to a record-breaking surge in electronics purchases, depleting the on-site stock of the majority of merchants. To theoretically address the issue, new devices were ordered.
Even beyond 2023, certain businesses may still see effects. The average semiconductor value per car sold has increased due to COVID-19. For instance, the government only provides incentives for electric cars in particular parts of Europe. The sale of smaller, less technologically advanced vehicles benefited in many cases from the "cash for clunkers" initiative launched in some localities during the 2009 financial crisis to get obsolete cars off the road.
The market expansion would be hampered by the numerous hidden expenses related to semiconductor outsourcing. It is particularly expensive for start-ups or introducing any new products because a significant amount of money is spent during revisions as a product develops. Before entering into agreements, many EMS providers consider their clients' general financial situation and the market's state for a product. Purchase orders, predictions, surplus inventory, rescheduling fees, cancellation fees, non-recurring engineering, product replacement and implementation costs can all result in additional expenditures. Budgeting for re-engineering needs and making plans for various prototype phases are two ways to save costs.
Recent Developments in the Industry:
As per the research analysis, the global outsourced semiconductors assembly and test market are segmented by material into Silicon/Germanium, Silicon Carbide (SiC) and Gallium Nitride (GaN).
According to the report, the global outsourced semiconductors assembly and test market are divided into major regions, i.e., North America, South America, Europe, Asia-pacific and Middle East & Africa.
Global Outsourced Semiconductors Assembly and Test Market:
The need for outsourced semiconductor assembly and testing has increased in response to the expanding demand for semiconductor-powered products. The market is being advanced by smart electric vehicles, mobile devices, communication infrastructure and IoT devices.
China Outsourced Semiconductors Assembly and Test Market: In 2021, China dominated the OSAT market in the area. Although its commercial semiconductor sector is still in its infancy, China has mastered chip technologies. The Chinese government will invest well over US$150 billion in semiconductors between 2014 and 2030 to narrow the gap. China is positioned to become more competitive in the OSAT market due to these government investments and a burgeoning market.
India Outsourced Semiconductors Assembly and Test Market: India has been hailed as the upcoming preferred location for semiconductor manufacturing at a convention of a global electronics authority.
Japan Outsourced Semiconductors Assembly and Test Market: Japanese raw resources, machinery and tiny active-passive components are the country's strengths in the semiconductor industry. Japan has significant advantages in upstream semiconductor materials along the semiconductor value chain.
Australia Outsourced Semiconductors Assembly and Test Market: With only a few specialized manufacturers of semiconductor chips, the essential components of all electronics that turn electrical currents on and off and regulate their flow, Australia is a minor player in the enormous industry.
Rest of Asia-Pacific Outsourced Semiconductors Assembly and Test Market: The region is predicted to have robust growth in 2021 due to several businesses, expanding demand for consumer electronics like smartphones & tablets and rising demand for autos.
The key players are adopting various growth strategies such as product launches, innovative technologies, acquisitions and collaborations, contributing to the global outsourced semiconductors assembly and test market growth.
Major market players contributing to the market's expansion include ASE Technology Holding Co., Ltd, Amkor Technology, Inc., Powertech Technology Inc., ChipMOS TECHNOLOGIES INC., King Yuan Electronics Co Ltd., Formosa Advanced Technologies Co., Ltd., Jiangsu Changjiang Electronics Technology Co., Ltd., UTAC Holdings Ltd., Lingsen Precision Industries Ltd., TongFu Microelectronics, Hana Micron and Tianshui Huatian Technology Co., Ltd.
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