On March 4th, Chinese assembly and testing company, JCET Group (JCET), announced its intention to acquire 80% equity of SanDisk Semiconductor Shanghai Co., Ltd. (SDSS), a subsidiary of Western Digital Corporation (WDC), for USD 624 million in cash. This strategic move aims to expand JCET’s market share in the storage.

The assembly and testing market competition is intensifying, especially with Moore’s Law slowing down in recent years. While advanced process technology still requires time, the demand for computing is skyrocketing.

As a result, advanced packaging is highly anticipated. Over the past two years, several testing and packaging giants have continuously enhanced their market competitiveness through mergers, expansion, and innovative technologies.

JCET Ventures into Storage with CNY 4.5 Billion Investment

According to the announcement, JCET has signed a “Equity Acquisition Agreement” with SANDISK CHINA LIMITED, the parent company of SANDISK CHINA LIMITED – SSDS.

Per the agreement, JCET Group intends to acquire 80% of the equity of SSDS held by the seller in cash. The transaction price, after full communication and negotiation between the parties, is approximately USD 624 million. After the completion of this transaction, JCET Group will hold 80% of the equity of SSDS, while SANDISK CHINA LIMITED will retain 20% ownership in SSDS.

According to the information available, SSDS was established in August 2006 and primarily engages in the research and development, packaging, and testing of advanced NAND Flash memory. Its product range includes iNAND flash modules, SD cards, MicroSD memory cards, etc., widely used in mobile communications, industrial IoT, automotive, smart home, consumer electronics, and other fields.

The selling party’s parent company, WDC, is a global leader in storage solutions. According to TrendForce’s data, in the third quarter of 2023, Western Digital held a market share of 16.9% in global NAND Flash revenue rankings, securing the third position worldwide.

Per the announcement, WDC has had a long-standing partnership with JCET since 2003, making it one of JCET’s key clients. JCET stated that following the completion of this transaction, the selling party (SANDISK CHINA LIMITED) and its parent company (Western Digital) will continue to be the primary or sole customers of SSDS for a certain period, ensuring a level of stability in its operational performance.

In its announcement of the acquisition of SSDS, JCET explicitly states that this decision stems from an in-depth analysis and forward-looking assessment of the global storage market.

As per the World Semiconductor Trade Statistics (WSTS), storage chips have emerged as the second-largest semiconductor sub-market, capturing approximately 28% of market share, trailing only behind logic chips. Looking ahead, it is projected that by 2024, the storage chip market will reach a staggering USD 130 billion in size.

Within this expansive market, NAND flash chips stand out, constituting approximately 40% of the global storage market. Moreover, it is projected to maintain a compound annual growth rate (CAGR) of 8% from 2021 to 2027. This indicates that the NAND flash chip market is not only vast but also possesses stable growth potential.

Intense Competition in the Semiconductor Packaging Market: Focus on Advanced Packaging

Major semiconductor packaging companies like ASE, Amkor Technology, Powertech, and Huatian Technology are continuously enhancing their competitive edge through expansions and acquisitions, driving rapid growth in the semiconductor packaging industry.

• ASE

Regarding ASE, it recently announced that its capital expenditure for this year is expected to increase by 40% to 50% compared to last year, with 65% allocated to packaging, especially for advanced packaging projects.

On February 22nd, ASE Group and semiconductor giant Infineon Technologies jointly announced the finalization of an agreement. ASE Group will invest EUR 62.589 million to acquire Infineon’s backend packaging facilities located in Cavite, Philippines, and Cheonan, South Korea.

In November 2022, ASE initiated construction on its fourth and fifth plants in Penang, Malaysia, with completion slated for 2025. Besides Malaysia, ASE continues its expansion efforts in Taiwan, including Kaohsiung, Zhongli, and Tanzi.

• Amkor

On January 16th, Amkor and semiconductor foundry Globalfoundries held a ribbon-cutting ceremony for the joint construction of the Amkor Porto plant in Portugal. Since February 2023, Globalfoundries has relocated 50 devices from its Dresden facility to Amkor’s new Porto plant.

The initial batch of client products has been certified using Globalfoundries’ equipment. Globalfoundries is transferring some of its 300mm production lines from Dresden to Amkor’s Porto facility, which is IATF16949 certified, to establish Europe’s first large-scale test and packaging plant.

• Powertech

In 2023, the packaging and testing firm, Powertech, expressed optimism about the future development of advanced packaging technologies. Powertech has outlined plans to resume significant capital expenditures in the latter half of 2024, ensuring sustained investments to maintain a competitive edge and prepare for long-term growth.

• Huatian Technology

In March 2023, Huatian Technology made significant strides by investing 2.858 billion yuan in its wholly-owned subsidiary, Huatian Technology (Jiangsu) Co., Ltd., for the construction of the “High-Density, High-Reliability Advanced Packaging Research and Industrialization” project.

Once completed, the project will enable an annual wafer-level integrated circuit packaging capacity of 840,000 pieces for Bumping, 480,000 pieces for WLCSP, and 26,000 pieces for ultra-high-density fan-out UHDFO. The construction period spans 5 years, from June 2023 to June 2028.

Currently, the packaging market’s competitive landscape extends beyond traditional OSATs, with major foundries and storage giants actively joining the fray. Technologies like TSMC’s SoIC, CoWoS, and InFO, Intel’s EMIB, Foveros, and Co-EMIB, as well as Samsung’s I-Cube (2.5D) and X-Cube (3D), are emerging and maturing.

The proliferation of various 2.5D and 3D packaging solutions indicates that competition in advanced packaging will only intensify, promising an exciting future ahead.

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(Photo credit: JCET Group)