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July 4, 2022

Packaging substrates are in the golden track, and multiple factors accelerate domestic expansion

Packaging substrates are the main driving force for the growth of the packaging material market. In 2026, the industry scale of IC packaging substrates for domestic companies in mainland China is expected to exceed US$1.9 billion.


- Japan, South Korea, and Taiwan, China are three pillars of the IC packaging substrate market, and some manufacturers have maintained a compound growth rate of revenue of more than 10% in recent years.


- The rapid development of the domestic IC industry accelerates the localization and replacement of packaging substrates, and PCB substrate manufacturers gradually enter the IC packaging substrate market.


IC package substrate (IC Package Substrate, also known as IC carrier board) is a key special basic material used in advanced packaging, which plays the role of electrical conduction between the IC chip and the conventional PCB, and provides protection and support for the chip. , heat dissipation and the formation of standardized installation dimensions.


Packaging substrates can be classified mainly by packaging process, material properties and application fields. According to packaging methods, packaging substrates are divided into BGA packaging substrates, CSP packaging substrates, FC packaging substrates, and MCM packaging substrates. According to different substrate materials, packaging substrates can be divided into hard boards, flexible boards and ceramic substrates. According to application fields, packaging substrates can be further divided into memory chip packaging substrates, MEMS packaging substrates, RF module packaging substrates, and processor chips. Packaging substrates and high-speed communication packaging substrates, etc., are mainly used in mobile smart terminals, servers/storage, etc.


IC packaging substrates are the main driving force for the growth of packaging materials market

According to the International Semiconductor Industry (SEMI) data, the global semiconductor packaging materials market size in 2021 will be US$23.9 billion, a year-on-year increase of 16.5%. The growth of the packaging materials market is mainly driven by organic substrates, leads and bonding wires. Among them, the market size of organic substrates was US$8.954 billion, a year-on-year increase of 16%.

There are many types of consumables used in semiconductor packaging, including packaging substrates, lead frames, bonding wires, packaging resins, ceramic packaging and chip bonding. According to the International Semiconductor Industry (SEMI) data, the value proportion of the main materials in terms of the global packaging material market size in 2018 is: packaging substrate (32.5%), lead frame (16.8%), bonding wire (15.8%), packaging Resin (14.6%) and ceramic encapsulation (12.4%). Among them, the packaging substrate is the consumable with the highest proportion in semiconductor packaging materials, and the value accounts for nearly one-third or more. According to JW Insights, packaging substrates have been the main driving force behind the growth of the packaging materials market.


Packaging substrates are in the golden track, and multiple factors accelerate domestic expansion

Packaging substrate technology continues to develop. According to Prismark, an industry research institute, the global market will exceed US$10 billion in 2020, reaching US$10.19 billion, and will maintain a compound annual growth rate of about 10% in the future. According to the Prismark 2021 Q4 report, the global IC packaging substrate industry will reach US$14.198 billion in 2021 and is expected to reach US$21.4347 billion in 2026.


According to previous statistics from JW Insights, the output value of IC substrates in mainland China in 2020 will be about 1.48 billion US dollars, accounting for 14.5% of the global market. The output value of packaging substrates from domestic enterprises is about 540 million US dollars, and the global proportion is 5.3%.


According to Prismark's forecast, from 2021 to 2026, packaging substrates will have the highest growth rate in the printed circuit board industry. Among them, the compound growth rate of packaging substrates in mainland China is 11.6%, which is higher than other regions. According to an analysis by JW Insights, assuming that the market penetration rate of domestic-funded enterprises' IC packaging substrates increases from about 5% to 9%, the industry scale of domestic-funded enterprises' IC packaging substrates is expected to exceed US$1.9 billion in 2026.


Market Pattern Characteristics of IC Packaging Substrates

Packaging substrates are in the golden track, and multiple factors accelerate domestic expansion

The global packaging substrate market situation has now formed a three-pillared market structure of Japan, South Korea, and Taiwan, China. The three companies occupy an absolute leading position, and some manufacturers have maintained a compound growth rate of revenue of more than 10% in recent years, regardless of revenue, profit and production capacity. Scale and technical level are ahead of domestic counterparts.


According to Prismark statistics, in 2020, the top ten packaging substrate companies in the world will hold more than 80% of the market share. Among them, Xinxing Group, Yifei Electric and Samsung Electro-Mechanics occupy the top three with market shares of 14.78%, 11.20% and 9.86% respectively.


Packaging substrates are in the golden track, and multiple factors accelerate domestic expansion

According to institutional statistics reports, from 2017 to 2020, the compound growth rates of Xinxing Electronics, ASE Materials, and Xinguang Electric were 12.92%, 20.23%, and 10.82%, respectively, and the operating income of other leading packaging substrate companies maintained steady growth.


In addition, the revenue of Jingshuo Technology and Nanya Circuit in Taiwan, China, will increase by more than 30% in 2021, 32.64% and 35.61% respectively. In terms of mainland Chinese enterprises, Shennan Circuit's revenue in 2021 will be 13.943 billion yuan, a year-on-year increase of 20.2%. The company's packaging substrate revenue in 2021 will be 2.415 billion yuan, a year-on-year increase of 56.35%; Xingsen Technology will achieve operating income from January to December 2021. 5.040 billion yuan, a year-on-year increase of 24.92%. The company's IC packaging substrate business has full orders, and its revenue has increased by about 98.28%.

We judge that the current packaging carrier market is still occupied by the world's top 10 manufacturers. Due to the high barriers to entry in the industry, there are almost no new entrants. JW Insights believes that the IC packaging substrate market will continue to be monopolized by the top 10 manufacturers for a long time, but the growth rate of the packaging substrate market of mainland Chinese companies is even higher.


Multiple factors drive the gradual expansion of domestic packaging substrate manufacturers

Global integrated circuit sales are growing rapidly, and in the context of the rapid growth of downstream industries, the demand for IC packaging has grown significantly.


1) There is a large domestic substitution potential in the packaging substrate market

In 2021, the domestic integrated circuit industry will continue to maintain a rapid and stable growth trend. In 2021, China's integrated circuit industry will exceed one trillion yuan for the first time. According to statistics from the China Semiconductor Industry Association, the sales of China's integrated circuit industry in 2021 will be 1,045.83 billion yuan, a year-on-year increase of 18.2%.


From the perspective of downstream demand, benefiting from the rapid development of digitization and intelligence, technologies and applications in 5G communications, computers, data centers, intelligent driving, Internet of Things, artificial intelligence, cloud computing and other fields have been continuously upgraded and expanded. demand has grown significantly. The packaging substrate has also entered a period of rapid development with the increasing demand in various downstream application fields, and the market prospect is good.

From the perspective of upstream industries, the global market share of domestic packaging and testing plants is more than 25%, and the domestic matching rate is only about 10%. IC packaging substrate is the key material for chip manufacturing. In the future, the continuous expansion of domestic wafer and packaging and testing capacity will definitely drive the growth of IC packaging substrate industry demand.

From the perspective of the external environment, affected by factors such as Sino-US economic and trade frictions and the new crown epidemic, the investment and construction of the domestic semiconductor industry chain has increased, and the demand for packaging substrates has continued to increase.


At present, there are few domestic IC packaging substrate manufacturers and insufficient supply. The domestic packaging substrate market has great potential for domestic substitution, breaking the monopoly of a few manufacturers in Japan, South Korea, and Taiwan, China, and improving the self-sufficiency of packaging substrates in the domestic integrated circuit industry. rate is the trend.

2) PCB substrate manufacturers are gradually entering the IC packaging substrate market

Packaging substrates are in the golden track, and multiple factors accelerate domestic expansion


Chinese mainland enterprises are still in the catching-up stage, mainly represented by Shennan Circuits, Zhuhai Yueya, Xingsen Technology, and HOREXS Group. In the field of conventional packaging substrates, Shennan Circuits, Xingsen Technology, Zhuhai Yueya, HOREXS Group and other domestic manufacturers have mass-produced products and have stable customer resources, and their technologies are relatively mature, and they have been announced one after another. Expansion. With the gradual expansion of the scale of domestic substrate manufacturers, the follow-up cost advantage will be obvious.


Shennan Circuits is a leading domestic PCB company and the first domestic company to enter the field of packaging substrates. The business scale of packaging substrates is at the forefront in China. In 2009, in order to achieve business upgrading and transformation and undertake major national scientific and technological special tasks, Shennan Circuits specially set up a packaging substrate business department, becoming the first local company to enter the packaging substrate field. At present, there are 2 packaging substrate factories in Shenzhen and 1 mature operation in Wuxi. Among them, the Shenzhen packaging substrate factory is mainly for module packaging substrate products; the Wuxi packaging substrate factory is mainly for storage packaging substrates, and has FC-CSP product technology. capacity and has achieved mass production. The company has packaging substrate projects under construction and planning in Wuxi and Guangzhou. Among them, the Wuxi high-end flip-chip IC substrate product manufacturing project is mainly for FC-CSP packaging substrates and some high-end storage packaging substrate products, and the Guangzhou packaging substrate project is mainly for FC-BGA packaging substrates, RF packaging substrates and FC-CSP packaging substrates Package substrate products.


Xingsen Technology is a leading domestic PCB model and small batch board company. It started the packaging substrate business in 2013, and entered the substrate industry relatively late. The substrate business has not yet reached expectations. Full production will be achieved in 2018, financial profitability will be achieved in 2019, and it is expected to achieve the preset operating goals in 2021. Xingsen Technology mainly includes three major businesses: PCB, military products and semiconductors, and its semiconductor business includes its packaging substrate business. At present, the company's substrate business is mainly based on high-end FC substrates, supplemented by mid-end CSPBGA substrates. The company's packaging substrate business has small production capacity and low capacity utilization.

Zhuhai Yueya focuses on the high-end packaging substrate business and is a leading enterprise in the domestic rigid organic coreless packaging substrate segment. The company specializes in the production of rigid organic coreless packaging substrates, which are mainly used in consumer electronics and have a large market space. The output value accounts for the highest proportion of the total output of packaging substrates in the world.



HOREXS Group (HOREXS Group), formerly known as Boluo Hongruixing Electronics Co., Ltd., focuses on memory chip packaging substrate business. There is a certain position in the field of memory chips; HOREXS Group will build a factory in 2020, mainly relying on the foundation of HOREXS for rapid expansion, and its products are mainly concentrated in the manufacture of mid-to-high-end packaging substrates, such as SIP/FCCSP/CSP/ BGA and other packaging substrate manufacturing, the substrate type is mainly based on BT rigid materials, widely used in consumer, automotive and other chip packaging fields.

The packaging substrate and the PCB manufacturing principle are similar. They are the extension of the PCB to the high-end technology to adapt to the rapid development of electronic packaging technology. There is a certain correlation between the two. Driven by the larger market space, as well as technology accumulation and cost optimization changes, more and more PCB substrate manufacturers will also begin to gradually enter the IC packaging substrate market.



By comparing the development history and competitive advantages of leading manufacturers, JW Insights believes that the transfer of the semiconductor industry is an opportunity to promote the development of regional packaging substrates. With the transfer of the semiconductor industry to mainland China, it will promote the development of domestic IC packaging substrate manufacturers.

The development and growth of the IC packaging substrate market requires a long period of technology research and development and process running-in, but there is a large space for future development. It is believed that with the simultaneous improvement of materials, equipment and other technologies in the industrial chain, domestic manufacturers are expected to grow rapidly on this track. Seize more markets and bring a lot of investment opportunities.

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