[News] Korean Advanced Packaging Industry’s Rise Delayed by TSMC and ASE Expansion

---

---

South Korean media reports that the main suppliers of artificial intelligence (AI) chip packaging are concentrated in TSMC and ASE Technology Holding Co., which have been actively expanding production to meet the growing market demand. Despite efforts to develop technology and invest, South Korean companies like Samsung Electronics have not been able to narrow the gap with TSMC and ASE.

According to the Chosun Ilbo, industry insiders indicated that TSMC is expanding its advanced packaging (CoWoS) capacity by selecting a site in the southern region, while ASE also announced the construction of a second packaging and testing factory in California, USA, and plans to build another in Mexico. The rapid growth of the AI chip market highlights the increasing importance of semiconductor packaging and testing. As the benefits of semiconductor process miniaturization diminish and production costs rise, advanced packaging that can connect multiple components has become an ideal alternative solution. Some organizations predict that the semiconductor packaging market is expected to grow by more than 10% annually and expand to USD 90 billion by 2030.

Taiwanese companies like TSMC and ASE benefit a lot, almost monopolizing the contract manufacturing of AI chips for companies like NVIDIA and AMD. In terms of chip manufacturing, TSMC aims to double its CoWoS capacity from the previous year to meet increasing orders. TSMC recently announced plans to build two new advanced packaging factories in the southwest. The construction of the first factory was paused due to the discovery of ancient artifacts, but TSMC quickly sought a new site and announced an expansion of CoWoS facilities investment by 2025.

ASE, serving customers including Qualcomm, Intel and AMD, is also striving to increase equipment investment to meet rising orders. ASE, with the highest market share in the semiconductor packaging and testing field, is increasing its capacity and considering building a factory in Japan to match the growing demand. ASE’s CEO Wu Tianyu stated that they are looking for a location in Japan with a solid semiconductor ecosystem for the new factory.

Samsung has also announced packaging investment plans. The company intends to raise the investment in the new plant in Taylor, Texas, USA from USD 17 billion to more than USD 40 billion for the construction of an advanced packaging research and development center and facilities, in which it will allocate over KRW 2 trillion annually to expand advanced packaging production lines.

South Korean semiconductor back-end packaging and testing (OSAT) companies such as Hana Micron and Nepes are also striving for AI chip packaging orders based on technical development. Hana Micron, the leading OSAT company in South Korea, has announced its commitment to developing 2.5D AI semiconductor packaging. Nepes is developing Package on Package (PoP) technology, which integrates different semiconductors into one chip, with a target for commercial mass production in the second half of 2025.

Despite the efforts of South Korean companies, it is difficult to narrow the gap with Taiwanese companies in the short term. Taiwanese companies have actively developed advanced semiconductor packaging and commercializing CoWoS at a earlier time, while South Korean packaging companies lag in accumulated technologies. South Korean industry insiders point out that TSMC and ASE have been collaborating for over 30 years. Therefore, as TSMC secured a large number of AI chip orders, it would prove a boon to Taiwan’s packaging ecosystem. In contrast, South Korea’s packaging industry, which has long focused on the memory production market, still has a long way to go to expand its market and even compete with Taiwanese companies.