What is the current status and future development of my country's integrated circuit packaging and testing industry?

At the 2019 China Semiconductor Packaging and Testing Technology and Market Annual Conference held in Wuxi, a profound interpretation was given on the current status and future development of my country's integrated circuit packaging and testing industry.

According to statistics from the China Semiconductor Industry Association, the global integrated circuit packaging and testing industry's sales revenue was US$54.06 billion in 2018, a year-on-year increase of 4.5%.

In 2018, the global integrated circuit packaging and testing (IDM) industry revenue was US$25.96 billion, a year-on-year increase of 5.7%, accounting for 48.0% of the total value of the integrated circuit packaging and testing industry, and the proportion increased by 0.5% year-on-year; the packaging and testing foundry (OSAT) industry revenue was US$28.10 billion, a year-on-year increase of 4.3%, accounting for 52.0% of the total value of the integrated circuit packaging and testing industry, and the proportion decreased by 0.5 percentage points year-on-year.

As the growth of the world's semiconductor industry slows down, China's integrated circuit industry has maintained a steady growth, with its scale and competitiveness strengthened, and its industry growth rate ranks first in the world. According to statistics from the China Semiconductor Industry Association, China's integrated circuit industry sales in 2018 were 653.2 billion yuan, a year-on-year increase of 20.7%. At the same time, among the three major industries of design, manufacturing and packaging and testing, the packaging and testing industry accounts for about 33.6%. Based on the reasonable proportion of the three industries in the world's integrated circuit industry (design: wafer: packaging and testing) of 3:4:3, the proportion of China's integrated circuit packaging and testing industry has also become more reasonable, and the industrial structure has become more optimized.

According to statistics from the China Semiconductor Industry Association's Packaging and Testing Branch, the growth of the domestic IC packaging and testing industry slowed down in 2018. The sales revenue of the packaging and testing industry increased from 181.66 billion yuan in 2017 to 196.56 billion yuan, a year-on-year increase of only 8.2%, and the industry's growth rate slowed down. However, the number of domestic IC packaging and testing companies increased slightly, and production capacity increased significantly. It is reported that by the end of 2018, there were 99 domestic IC packaging and testing companies of a certain scale, a slight year-on-year increase. The annual production capacity increased significantly, reaching 25%.

At present, the distribution of domestic packaging and testing companies has spread from the Yangtze River Delta, Pearl River Delta, and Bohai Rim regions to the central and western regions, forming a four-legged pattern. In 2018, the distribution of packaging and testing companies in the central and western regions accounted for 14%, the same as the Pearl River Delta region, and second only to the Yangtze River Delta region.

According to the "China Semiconductor Packaging and Testing Industry Research Report (2019 Edition)" by the Packaging Branch of the China Semiconductor Industry Association, it can be seen from the ranking of the top 30 packaging and testing companies in 2018 that there are only 11 domestic and joint venture companies, and the position of foreign and Taiwanese companies in the majority in the domestic IC packaging and testing industry has not changed.

Among them, there are some changes in the top 10 companies compared with 2017. Quanxun RF Technology (Wuxi) Co., Ltd. is included in this ranking for the first time and ranks seventh; in addition, Renesas Semiconductor (Beijing, Suzhou) Co., Ltd. also jumped from the twelfth place in the previous year to enter the top ten.

The top 10 packaging companies had a total sales revenue of RMB 97.06 billion in 2018, accounting for 49.4% of the total IC packaging and testing industry sales revenue of RMB 196.56 billion that year, up 1.5 percentage points from 47.9% in 2017, indicating a higher degree of concentration.

Four domestic integrated circuit packaging and testing companies, Changdian Technology, Tongfu Microelectronics, Huatian Technology and Jingfang Technology, are listed on the Shanghai and Shenzhen Stock Exchanges respectively. According to the 2018 annual reports disclosed by the four companies, except for Tongfu Microelectronics, the other three companies have experienced a significant decline in annual net profit.

Nowadays, advanced packaging technology is regarded as an inevitable choice to continue Moore's Law, and my country's advanced packaging and testing technology has also made continuous breakthroughs. For example, Changdian Technology has made progress in high-density system-level packaging and testing technology used in 5G communications; Tongfu Microelectronics has successfully developed gold bump process technology for 12-inch touch and display integrated chips.

It is worth noting that in 2018, Changdian Technology, Tongfu Microelectronics, Huatian Technology and others continued to upgrade their layout of advanced packaging technology and processes, and continued to make new progress and achievements.

In 2018, Changdian Technology made progress in high-density system-level (SiP) packaging technology for 5G communications, and successfully innovated multiple SiP packaging technologies, the main technical functions of which include shielding technology, signal transmission technology, thermal conductivity technology, and hybrid packaging technology, which can meet the high-speed transmission needs of the 5G market. At the same time, Changdian Technology has also made great progress in the new generation of ultra-thin packaging technology for under-screen fingerprints, which has been applied to many first-tier mobile phone system vendors.

In 2018, Tongfu Microelectronics successfully developed gold bump process technology for 12-inch touch and display integrated chips.

In preparation for the 5G era, Huatian Technology made significant progress in millimeter-wave radar chip packaging in 2018. The silicon-based fan-out packaging of millimeter-wave radar chips was successfully developed, with a product packaging yield of more than 98%, and has entered the small-scale production stage.

Despite market opportunities such as import substitution and application-driven growth in emerging markets, there are also challenges.

Liu Dai, the current rotating chairman of the Packaging Branch of the China Semiconductor Industry Association, believes that the challenges facing my country's packaging and testing industry come from five aspects, namely, the gap in advanced packaging technology needs to be further narrowed, the improvement and strengthening of the industrial chain will help promote the realization of independent and controllable packaging and testing industry, the introduction and training of talents are the foundation for the packaging and testing industry to become bigger and stronger, the potential for development depends on the layout of advanced packaging and testing platforms, and the extension of the supply chain will lead to intensified competition in the packaging and testing industry.

At the same time, there is still a big gap between my country's packaging and testing industry and the world's first-class level. Among the world's top 10 packaging and testing companies, Taiwan accounts for 5 seats, with a market share of 42.1%, and mainland China accounts for 3 seats, with a market share of 20.6%; among the top 30 companies, foreign and Taiwanese companies are stronger than domestic companies in terms of quantity, scale and technical capabilities.

Liu Dai believes that in this period of development where opportunities and challenges coexist, under the new situation of trade frictions and product technology embargoes, under the country's independent and controllable development needs, driven by the emerging market of 5G+AI, with the strong support of the country and the efforts of enterprises themselves, through integrated innovation, intelligent manufacturing, collaborative development, sharing and win-win, we will build a global cooperation platform and improve independent core technology research and development capabilities, strengthen talent training and management innovation, and become stronger and bigger to promote the high-quality development of the integrated circuit packaging and testing industry.