Chinese Providers Earn 26.9% of the Projected Revenue of Top 10 OSAT Providers for 1H18, Hitting a New Record High, Says TrendForce

The total revenue from the global top 10 providers of outsourced semiconductor assembly and test (OSAT) service for 1H18 is estimated to grow by 10.5% YoY, reaching US$11.12 billion, reports TrendForce. Particularly, JCET, TSHT and TFME, the major three Chinese OSAT providers, are projected to represent a share of 26.9% in the total revenue of the top 10 providers in 1H18, hitting a new record high.

The OSAT market expects slower growth in 1H18 in contrast to the growth rate of 16.4% in 1H17, due to slower expansion of global smartphone market and rising prices of wafers. Furthermore, the entire IC testing and packaging industry is also influenced by the headwinds, with the total revenue estimated at US$25.15 billion. The YoY revenue growth is 1.4%, lower than 9.1% of a year ago.

The projected revenue ranking of the top 10 OSAT providers for 1H18 shows no change compared with the 1H17 ranking. After a series of merger deals, JCET, TSHT and TFME all register outstanding performances, with double-digit revenue growths in 1H18.

As for Taiwan-based companies, the merger of ASE Group and SPIL has come to an end, but the growth in revenue and gross profit margin is not as good as in 1H17, due to the weak market of high-end smartphones and higher wafer prices. The situation is the same for Amkor, KYEC and ChipMOS. As for UTAC Group, it witnesses slight revenue decline because of the closure of its fab in Shanghai. It is also worth mentioning that PTI stages the most outstanding performances among other non-Chinese providers in the ranking. The company benefits from higher prices of memory products, as well as the acquisition of Tera Probe and Micron Akita, which has pushed up the overall revenue.

TrendForce points out that, although the market remains generally optimistic about the automotive applications, 5G, AI, etc., but these emerging technologies are still in the early phases of adoption, creating limited growth momentum for the industry. On the other hand, the packaging and testing business remains weak in the whole industrial value chain, so most of the packaging and testing service providers are faced with cost pressures. Consequently, they record lower gross margins in 1H18 compared with one year ago. The pressure of weak gross margins may continue to the end of this year despite the traditional peak season in 2H18, because the increasing gap between wafer supply and demand will continue to raise the costs of wafer fabrication.