According to TrendForce research, driven by strong demand for 5G mobile phones, base stations, automobiles, and HPCs, the global output value of packaging and testing (including foundry and IDM) reached US$82.139 billion in 2021, or 25.83% YoY. This upward momentum is forecast to continue in 2022, taking output value to US$101.185 billion in 2022, or 23.19% YoY. From the perspective of regional distribution, China’s IC packaging and testing output value in 2021 was approximately US$39.443 billion, increasing 31.7% compared with US$29.941 billion in 2020, becoming the world’s fastest-growing major market in terms of packaging and testing output value.
Shanghai pandemic lengthens overall lead time, hinders China’s packaging and testing growth in 2Q22
In 2Q22, Shanghai was locked down due to the COVID-19 pandemic. Although wafer fabs and packaging and testing plants were still operating normally, the pandemic hindered logistics and the materials required for packaging could not be effectively shipped from Shanghai, affecting transportation efficiency and logistics costs to a certain degree. Overall, China’s packaging and testing industry was not significantly affected by the pandemic in 1Q22 but, in 2Q22, the industry will bear the brunt of the COVID-19 situation, with packaging and testing companies experiencing prolonged overall lead times and sluggish revenue growth.
NEVs and HPCs to become new growth drivers, fabs and packaging and testing companies accelerate deployment
The growth rate of smartphones, a core driving force behind IC packaging and testing output value, is slowing down. Since smartphone shipments peaked at 14.575 million units in 2017, volume has not surpassed this number in the ensuing years. Even though the upgrade from 4G to 5G brought about a wave of replacements, the overall smartphone market has reached maturity, with slowing growth or even negative growth, so its demand on wafer manufacturing and packaging and testing is likewise slowing down.
Aside from mobile phones, growth in HPC and new energy vehicles (NEV) is becoming a new revenue engine. At present, the world’s major automobile production countries are accelerating the penetration rate of NEVs, and packaging and testing companies are also accelerating their investment in the automotive and HPC sectors. From the perspective of fabs, TSMC’s HPC revenue accounted for 41% of total packaging and testing revenue in 1Q22, surpassing mobile phones for the first time and becoming the largest source of the company’s packaging and testing revenue.