According to Yole, a well-known analysis agency, the value of the global IC substrate market grows from 15.8 billion USD in 2021 to 29.6 billion USD in 2027, with a compound annual growth rate (CAGR) of 11%. It is primarily driven by high demand in the mobile, consumer, automotive telecom and infrastructure markets.
Overview of IC substrate market
From the perspective of semiconductor manufacturing process, the integrated circuit industry chain can be divided into three links: design, manufacturing, packaging and testing from top to bottom. Among them, packaging and testing refer to the process of converting wafers that have passed the test in the midstream process into independent chips, which is an important guarantee for the industrial chain.
IC substrates (integrated circuit substrates) are mainly composed of advanced packaging (AP), flip chip scale package baseband (FC CSP) and 5G wireless equipment, high-performance computing (HPC), graphics processing unit (GPU), server and FC BGA in the automotive industry. The market value grows from 12.6 billion USD in 2021 to 24.3 billion USD in 2027, at a CAGR of 12%.
Substrate-level printed circuit boards (SLP), mainly used in high-end smartphones, generated revenue of 3 billion USD in 2021 with growing at a CAGR of 6.7% to reach 4.3 billion USD in 2027. Embedded die (ED) in laminate substrates is relatively new to the market, and grows at a CAGR of 39%, from 142 million USD in 2021 to 1 billion USD in 2027.
The main substrate technology trend is through the adoption of semi-additive process (SAP), modified SAP (mSAP) or advanced mSAP (amSAP). In recent years, the development of SLP technology has remained stable, while the goal of ED technology is to enable multi-chip embedding to reach more applications.
Demand of ABF substrate is expected to increase
ABF substrates are a relatively new component, pioneered by Intel in the late 1990s when it developed more powerful microprocessors, according to Bloomberg. It takes its name from Ajinomoto Co., a Japanese company that produces insulating materials. Because it facilitates fast computing in high-end chips, this material was first used as the packaging technology of choice for central processing units in personal computers and servers.
Major semiconductor companies such as Intel, AMD, and Nvidia now rely on ABF substrates to produce chips. But due to economic recessions these years, substrate makers have been reluctant to aggressively invest in capacity. Some analysts predicted that supply is expected to grow at a compound annual growth rate of 16% through 2024, while demand is expected to grow by 18% to 19%.
As cars become more electrified and digital, automotive chip suppliers will use more ABF substrates. However, it will be difficult for them to gain primacy among substrate makers as they have tough semiconductor companies like Intel. It means that there will be more direct investment in substrate producers or attract more new ABF substrate players.
Large development space for Chinese IC substrate manufacturers
With 5G communication, artificial intelligence, cloud computing, autonomous driving, smart wearables, smart home and other product technology upgrades and application scenario expansion, demands for advanced packaging such as chiplet are witnessed great growth. The global IC substrate industry enters a period of rapid development.
At present, the market share of chip packaging and testing foundries in the mainland of China exceeds 20%, while the operating income of IC substrates accounts for less than 4% of the global market. The mismatch between the market share of china’s packaging and testing manufacturers and the market share of IC substrates has further enhanced the internal demand for domestic substitution of IC substrates.
The growth rate of the IC substrate industry is ahead of other PCB sectors. IC substrate projects have a long investment cycle, high industry entry barriers, and a relatively clear competitive landscape.
Currently, the carrier board market is mainly monopolized by manufacturers from Taiwan of China, Japan and South Korea. The market share of manufacturers in the mainland of China is smaller. In the field of high-end products such as ABF carrier boards, the localization rate is extremely low. Thus, there is a huge space for Chinese manufacturers to take opportunities for overtaking on corners.
In terms of production expansion, the main direction of the world’s leading IC substrate board suppliers is ABF carrier boards, while suppliers of the mainland of China are still mainly BT carrier boards. Some PCB manufacturing companies are planning to expand ABF board production. It is expected that related projects will be put into production in 2023, and manufacturers of the mainland of China will enter the high-end carrier board market.
For BT substrates, memory chips are an important application field. The expansion of NAND Flash, DRAM and other memory chips has made it become a development trend, which increases the volume and market share of domestic BT substrates.
For ABF carrier boards, high-performance chips such as HPC and AI chips become the fastest-growing demand field. The cost of CPU and GPU in high-end servers is high. The increase in demand in downstream high-end fields has increased the value of supporting ABF carrier boards.
Meanwhile, as the development of advanced packaging technologies such as Chiplet and 2.5D/3D, the demand area for ABF substrates has also increased significantly. And the dual-line development of volume and price has become an important basis for the increase in the scale of the ABF substrate market.
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