Analysts are projecting strong growth in advanced packaging, with CAGR through 2026 approaching 7% across the segment; much higher for certain high-end technologies, including 3D stacking, embedded die, and fan-out. Outsourced assembly and test (OSAT) firms, which package finished die manufactured by independent device manufacturers (IDM) and foundries, will be challenged by the complexity of the advanced packaging processes and will face stiff competition, in many cases from their own customers. If they are to thrive, or perhaps just survive, they will need to embrace smarter manufacturing approaches.
The historical division between front-end device manufacturing and back-end packaging/testing is the result of their vastly different cost structures and process complexity. The relative simplicity of the back-end process led OSATs to compete primarily on price, seeking always to minimize costs and maximize volume. Simple processes were simple to control. The acquisition, storage, and analysis of process data were costs to be avoided wherever possible. Advanced packaging processes have introduced a host of new variables that must be controlled to ensure process yield and product reliability. Process data is no longer a cost to be avoided, but should be considered an essential asset to be leveraged to maximize profitability.
Meanwhile, as they accommodate increasingly complex processes, OSATs confront encroachment in their markets by sophisticated competitors who may also be their customers – IDMs and foundries who have outsourced a significant portion of their production to OSATs but have also maintained their own internal back-end capabilities. Advanced packaging processes have been described as the migration of front-end like processes to traditionally back-end applications. With this evolution, the advantage device manufacturers once had, by outsourcing assembly and test to avoid diluting their expertise with low-value processes, has greatly diminished. More importantly, these customers-turned-competitors are already comfortable with managing complex processes – they wrote the book. In addition to IDMs and foundries, substrate and printed circuit board (PCB) suppliers, electronic manufacturing services (EMS), original design manufacturers (ODM), and others see the opportunity presented by the significant growth forecasted for advanced packaging.
Data is the life blood of smarter manufacturing – acquiring it, storing it, organizing it, analyzing it, sharing it. Without leveraging it you are not just blind; in the competitive environment of semiconductor manufacturing, you will probably not survive. OSATs are not new to data collection and management. After all, testing is part of their name. But test data is product/function focused. In its simplest form it is go/no go. Functional testing may go beyond that, to measure how well it works, if for no other reason than to identify the best devices and sell them for premium prices. Smarter manufacturing requires data on a whole new scale – data that is both deep and broad.