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level products. Unquestionably, the Unfortunately, in the current supply will empower more SiP businesses
competitiveness of a SiP business depends chain environment, it is close to strategically (Figure 2). High-end
on its operational efficiency, faster time impossible for existing business models OSATS can enable a full turnkey solution
to market and cost-effectiveness, which (foundry, OSAT, substrate maker, etc.) to via good CapEx investment and mergers
can be enhanced by venturing into a establish a full turnkey solution without and acquisitions (M&A) in order to gain
diversified business model within the crossing over into a new business model substrate makers’ and EMS’ capabilities,
supply chain. to gain the required capabilities. Within attracting fabless at a lower cost and with
The business model that manufacturers the SiP context, a strategic business model co-design convenience. For example, in
choose to adopt is a crucial factor for the expansion is starting to emerge. Both 2009, ASE launched a cash and stock
success of SiPs. In other words, the choice OSATS and foundries are progressively tender offer to buy all the outstanding
of business model is as important for adapting their models toward full turnkey. common shares of Universal Scientific
SiP’s success as other key factors, such as For example, foundries are gaining OSAT Industrial Co. Ltd. (USI), which was a
materials, technology, and cost. In reality, and substrate capabilities to gain control leading original design manufacturer
the SiP concept is not new, and, technically, of testing and assembly to protect their (ODM)/EMS company specializing in
it need not start from ground zero as it is a interests if a yield issue arises toward the advanced SiP modules. Meanwhile,
packaging platform that integrates multiple end of the supply chain. foundries will manage M&A and CapEx
dies, leveraging on existing technologies Over the past few decades, original trade-offs related to SiP requirements to
and materials. However, if one big batch equipment manufacturers (OEMs), maximize their control over SiP quality
of components is not available due to electronic manufacturing services (EMS), and performance. For example, TSMC has
delivery or quality problems, the whole SiP foundries, IDMs, and fabless companies been expanding its packaging capabilities
production process within the supply chain have relied heavily on OSATS to lead or for applications in advanced mobile and
across different businesses comes to a halt. co-lead the development and up-scale high-performance computing (HPC).
Additionally, SiP solutions will also require of advanced packaging technologies. To that end, TSMC has established
assembly and test capabilities. Therefore, a Based on a holistic analysis of the entire streamlined one-stop services with both
full turnkey SiP business model solution is SiP supply chain, we believe OSAT front end of line (FEOL) and back end of
ideally the best manufacturing option. and foundry business model evolution line (BEOL) capabilities. Furthermore,
the technologies are all SiP-centric.

Market value and drivers
The SiP market generated a massive
package revenue of US$13.4 billion in
2019 and will grow at a 6% compound
annual growth rate (CAGR) to reach
US$18.8 billion in 2025 (Figure 3). The
flip-chip and wire bond system in package
(FC and WB SiP) market is valued at
US$12.2 billion, which accounts for more
than 90% of SiP packaging revenue.
By 2025 it is expected to reach US$17.1
billion, growing at a 6% CAGR 2019-2025 .
The fan-out (FO) platform is viewed
as one of the top packaging options
for SiP. However, the reality of SiP’s
Figure 2: System in package supply chain: business model evolution. SOURCE: [1] potential in FO is still fairly limited
by a yield-cost concern with multi-
die processing. FO SiP market value
is expected to experience a steady 3%
CAGR, from US$1,148 million (2019)
to US$1,364 million (2025). In 2019, the
mobile and consumer market accounted
for >98% of FO SiP, with the remainder
attributed to telecom and infrastructure.
Although FO SiP revenue in telecom and
infrastructure is relatively new and small,
growth has been strong. Yole estimates it
will generate revenue of US$118 million
by 2025, at a 13% CAGR. Separately,
the radar and automotive markets are
predominantly packaged by FO - but it is
a single chip, not FO SiP.
Figure 3: System in package market revenue: 2019-2025 forecast by technology. SOURCE: [1]

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