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[News] China’s Advanced Packaging Sees a Surge in Semiconductor Material M&As amid AI Boom
Amid the AI boom, global semiconductor giants such as TSMC have been making strides in CoWoS capacity expansion. However, market demand for materials related to advanced packaging has also been brewing, as China is seeing a surge in mergers and acquisitions in the sector recently, according to Chinese tech media ijiwei.
The ijiwei report notes that the transition from traditional methods to more advanced chip packaging technologies, such as 2.5D and 3D IC packaging and System-in-Package (SiP), involves more complex processes. As a result, there is increasing demand for advanced packaging materials.
On the other hand, the growing need for chips with strong computing power, combined with the recovery of the semiconductor industry and capacity expansions by major companies in advanced packaging, are further accelerating the demand for upstream materials, according to ijiwei.
Less Than 30% of China’s Packaging Materials Are Domestically Produced
However, the report also indicates that the key semiconductor materials market remains largely dominated by Japanese and Western players. In China, the domestic production ratio of semiconductor materials is reportedly only 15%, with packaging materials below 30%.
According to ijiwei, to enhance competitiveness in the domestic semiconductor materials sector, and with favorable policy support, some leading Chinese firms are actively advancing into the field of advanced packaging materials through mergers and acquisitions.
Mergers and Acquisitions Pour in, One after Another
To begin with, in late November, Jiangsu Huahai Chengke New Materials released plans to acquire Changzhou Huawei Electronics, which specializes in epoxy molding compounds—a critical material for integrated circuit packaging.
According to the data shown at the Mtia website, Jiangsu Huahai Chengke New Materials has built a pilot production line of epoxy plastic compound with international advanced level and 2 large production lines. Notably, Huawei Electronics, the acquired company, ranked third globally in sales volume among epoxy molding compound companies and fourth in sales revenue in 2023, the ijiwei report adds. Moreover, it held the top position in both sales volume and revenue in China, according to ijiwei.
On the other hand, in early November, Huatai Chemical’s acquisition of POME brought onboard a key supplier for Huawei HiSilicon. The ijiwei report notes that POME produces polyimide (PI) materials, which are critical for advanced semiconductor packaging, and have helped Huawei overcome bottleneck challenges in packaging materials.
In October, Shenzhen’s Zhizheng agreed to acquire 12.49% stake in Advanced Assembly Materials. According to ijiwei, in terms of revenue, AAMI ranked among the global top five lead frame suppliers in 2023. By the first half of 2024, its revenue had risen to fourth globally, while it maintained its position as the top lead frame supplier in China.
While in February, the acquisition of TGVTECH by WG Tech reportedly added a glass-based chip panel-level packaging substrate manufacturer to the latter’s portfolio. Glass substrates are regarded as a key material for next-gen advanced packaging technologies essential to AI chips, according to ijiwei.
According to ijiwei, in the aforementioned cases, the acquired companies either hold a leading market share internationally or domestically, or their products address critical bottleneck technologies and break foreign monopolies.
Though China is still relatively behind in the field of advanced packaging, with continuous breakthroughs in 2.5D, 3D, and other advancements by local companies such as JCET and Huatian Technology, domestic manufacturers are expected to play an increasingly important role in the global advanced packaging market, as per the report.
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(Photo credit: TGV Tech)
