Fan Out Packaging Market

Market Overview

The global fan-out packaging market was valued at USD 2.13 billion in 2023. It is expected to reach USD 9.87 billion in 2032, growing at a CAGR of 18.60% over the forecast period (2024-2032). Fan-out packaging technologies, such as embedded wafer-level ball grid array (eWLB) and integrated fan-out (InFO), offer cost advantages over traditional packaging methods like flip-chip and wire bonding. These technologies reduce manufacturing costs by eliminating the need for additional substrates and simplifying assembly processes.

Fan-Out Packaging has gained significant technical advantages that have aided in its extensive commercialization and have maintained its dominance within the sector. Fan-Out Packaging will be increasingly important as we enter the system-in-package (SIP) era and heterogeneous integration. To fulfill application needs for more compact form factors and enhanced electrical and thermal performance, ASE is developing this advanced packaging platform. Fan-out Packaging, the newest packaging trend, offers the semiconductor packaging sector a viable area for market expansion. Currently, fan-out wafer-level manufacturing is carried out on wafer levels with a maximum diameter of 12"/300 mm and 330 mm, respectively. More prominent form factors are being developed to increase productivity and reduce costs.

Market Dynamics

Fan Out Packaging Market Drivers

Development of High-Performance Computing and 5G Wireless Networking

The growth of 5G wireless networking and High-Performance Computing is anticipated to fuel demand during the forecast period. Fan-out Packaging is seeing significant growth in applications with low transmission loss and high antenna performance, such as Antennae-in-Packages (AiPs), which aim to reduce signal loss with shorter interconnect lines because wide bandwidth requires higher-frequency millimeter wave (mmWave) solutions. Additionally, several significant 5G electrical companies dissect System on Chip (SoC) dies into numerous more minor, independent chips, each with a different function. The market expansion of fan-out packaging technology is anticipated to be accelerated by the increasing introduction of 5G devices over the globe.

Applications for high-performance computing are also anticipated to propel the development of the technology during the anticipated time frame. For instance, the Institute of Microelectronics (IME) of The Agency for Science-Technology and Research (A*STAR) and Soitec (Euronext Paris) recently launched a cooperative program to create and include a novel layer transfer mechanism. The new, cost-effective method delivers improved performance, greater energy efficiency, and higher product yield.

Fan Out Packaging Market Restraint

Production's Challenges with Manufacturing and Cost

The most recent high-density fan-out packaging is transitioning to a 1 m line/space barrier and beyond. This is a milestone in the industry as higher-density fan-out packaging progresses toward complicated structures with more delicate routing layers. Fan-outs function better at such crucial dimensions, but they face numerous manufacturing and financial obstacles before they can overcome the 1 m barrier. Warpage or wafer bow is one of the main problems with fan-out, and die placement also affects wafer flatness and puts stress on the dies. The die displacement creates difficulties for lithography alignments and steps. Such production difficulties are slowing the market's adoption growth.

Another major challenge is the creation of RDLs, as the industry is currently producing the production fan-out with RDLs at 5-5m, including 2-2m. Higher production yields are constrained because the problems increase when the fan-out extends to 1-1 m and beyond. In order to reduce the resistance of the metal lines, the copper thickness must be maximized during the RDL process.

Fan Out Packaging Market Opportunities

Increasing Demand for Fan-out Packaging

OEMs throughout the market push their contract manufacturers hard to adopt the new substrate sizes and packaging methods to provide cost savings. The supply chain started working on the first prototypes of panel-level packing machinery and process improvements half a decade ago, and pilot production of these products began in 2020. Several early adopters are planning to transition into high-volume manufacturing in 2021 with various products. Market leaders, including Nepes, Samsung, and Powertech International (PTI), are nearing the completion of their technical qualifications. At the same time, larger suppliers like Amkor Technology, ASE Group, and ESWIN are expected to adopt the technology in the following years. The industry is anticipated to move toward large package bodies due to the next generation of technological advancements, including systems in package (SiP), AI solutions, and high-performance computing (HPC) applications. This is because wafer dimensions and shape will severely restrict substrate utilization, hurting the total cost of ownership.

Regional Analysis

The global fan out packaging market is divided into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant shareholder in the global fan out packaging market and is anticipated to grow at a CAGR of 21.80% over the forecast period. Panel-level fan-out packaging, a next-generation technology that is anticipated to lower the price of today's fan-out packages, is being developed by several packaging companies. Most businesses in Taiwan are increasing their FOWLP production capacity, which is anticipated to improve exports and support the growth of the domestic market. In addition, China controls a sizeable portion of the sophisticated packaging market. China's IC packaging currently has solid policy backing against China's industrial improvement. The rapid growth of China's packaging business has been facilitated by the expansion of the consumer electronics sector in that country, as well as the rising number of engineers working in related fields.

North America is anticipated to grow at a CAGR of 19.5%, generating USD 1,271.75 million during the forecast period. The United States is expected to have significant market growth due to the extensive use of consumer electronics, the incorporation of cutting-edge technology into autos, and other businesses that have concentrated their investments in the area. The International Trade Association (ITA) estimates that over 82% of semiconductors are exported directly from the United States and sold abroad by US-owned subsidiaries, accounting for US-based R&D, IP generation, design, and other high-value activities. According to World Semiconductor Trade Statistics, the region accounts for about 22% of the global semiconductor market but over 10% of the discrete semiconductor industry (WSTS).

Due to the absence of semiconductor manufacturing activity, the European region has one of the minor market shares. It is projected that the region's semiconductor demand will continue to grow year over year, with the market for advanced fan-out packaging benefiting further from the rising popularity of consumer electronics. To revitalize the manufacturing and packaging value chain in Europe, the European Union also launched sophisticated packaging for the photonics, optics, and electronics for low-cost manufacturing in Europe. Researchers are creating piezo-MEMS harvesting devices using panel fan-out as part of the smart-MEMPHIS project, which Europe sponsors. The system includes a supercapacitor, an ASIC, and a MEMS-based energy harvester.

Segmental Analysis

The global fan out packaging market is segmented by carrier type and business model.

Based on type, the global fan out packaging market is bifurcated into core-fan-out, high-density fan-out, and ultra-high-density fan-out.

The ultra-high-density fan-out segment is the highest contributor to the market and is expected to grow at a CAGR of 22.10% during the forecast period. The Redistribution Layer (RDL) measurements for the Ultra High-Density Fan-Out (UHD FO) are 5 m and 5 m, with more than 18 inputs and outputs (I/O) per square millimeter. It can be seen as an improved high-density form, where the L/S fits a more significant package size for HPC applications like networking and data center servers. Compared to 2.5D silicon Through Silicon Via (TSV) interposer packaging, this UHD FO is advantageous for low- to mid-end 2.5D applications with affordable solutions, such as HPC or server networks.

Standard-density or core fan-out is defined as a package with less than 6 I/Os per mm2 and RDL of more than 15/15 m line and space and is aimed at consumer and mobile applications. Audio codecs, power management ICs, radar modules, and RF are some components that drive core or standard-density fan-out. One of the leading clients in the fan-out market is Qualcomm. Core fan-out, which already exists for several applications, is anticipated to grow in popularity and surpass WLCSP and Flip-Chip in market share due to its higher embedding capacity. This has met the enormous need from the telecom sector for an inexpensive, tiny container that could embed ICs without being constrained by the surfaces of the chips.

Based on carrier type, the global fan out packaging market is bifurcated into 200 mm, 300 mm, and panel.

The 300 mm segment owns the highest market share and is anticipated to grow at a CAGR of 15.40% over the forecast period. High-density fan-out, aimed for mid-range to high-end programs, has between 6 and 12 I/Os per mm2 and between 15/15 m and 5/5 m line/space. High-density fan-out Packaging became popular to address the form factor and performance criteria for mobile phone packaging. Mega pillar plating and redistribution layer (RDL) metal are essential components of this technique, and one of the most notable applications of high-density fan-out is TSMC's InFO technology. Applications with a greater pin count, including application processors, are this technology's focus (AP) focus.

Organic substrates composed of epoxy mold compound (EMC), produced by a thermal compression method, is used in fan-out wafer-level Packaging (FOWLP) technologies. These EMC wafers can generate chip packages that are thinner and faster without the use of interposers through silicon vias at a lower cost than when utilizing an inorganic substrate. Due to its larger surface area, the 300mm eWLB wafer has more warpage and process difficulties than the 200mm case. Due to the high level of automation and associated phases in the value chain, Infineon invested in constructing a 300mm line from the beginning for completely automated manufacturing in Dresden.

Based on the business model, the global fan out packaging market is bifurcated into OSAT, foundry, and IDM.

The foundry segment is the highest contributor to the market and is expected to grow at a CAGR of 20.80% during the forecast period. A semiconductor foundry, also known as a fab or a semiconductor manufacturing plant, is essentially a factory that produces goods like integrated circuits. The main reason a semiconductor fab exists is to fabricate the designs for businesses like fabless semiconductor companies. A company that does not create its designs is called a pure-play semiconductor foundry. Additionally, the fan-out packaging technology was only used in 2015 by outsourced semiconductor assembly and test (OSAT) businesses.

Third-party IC packaging and test services have been made available by the companies that provide outsourced semiconductor assembly and test services. In essence, these OSAT companies are merchant sellers. These OSATs produce a portion of the IC packaging for the IDMs (integrated device manufacturers) and foundries in the market with internal packaging operations. These OSATs are receiving a growing amount of packaging outsourcing from fabless enterprises. Additionally, OSAT services are being used by both fabless and ISMs. To operate beyond the capacity of their packaging operations and for any unique packaging requirements, the corporations with their packaging facilities source these OSAT companies.

Recent Developments

• May 2024 - NVIDIA announced its intentions to expedite the launch of its GB200 into panel-level fan-out packaging to ease the capacity limits of CoWoS advanced packaging. This shift, which was initially planned for 2026, has reportedly been brought up to 2025, creating chances for the panel-level fan-out packaging industry.
• March 2024 -  Deca and ASU announced that they will work together to establish the first Fan-Out Wafer-Level Packaging (FOWLP) research and development facility in North America. The establishment of the new Center for Advanced Wafer-Level Packaging Applications and Development is expected to spur innovation in the United States by increasing the country's capacity for semiconductor manufacturing and propelling developments in cutting-edge industries like high-performance computing, machine learning, artificial intelligence, and automotive electronics.