Over the next five years, the market size for semiconductor assembly and testing services is expected to increase by $21.21 billion, registering a CAGR of 6.82%, according to the latest research report from Technavio., and 56% of the market’s growth will originate from APAC. This growth in the demand for automotive electronics, such as navigation, safety, and multimedia devices will drive the semiconductor assembly and testing services market growth in APAC.
What’s driving the increase? Key Factors
The rising sales of IoT devices is one of the key drivers supporting the semiconductor assembly and testing services market growth. Globally, an estimated 35 billion devices were a part of IoT connected environment in 2021. IoT devices collect data through sensors and actuators, transmitting it to a centralized location on a real-time basis. This empowers the end-user to make informed decisions.
Another major growth avenue for this technology will arise from the manufacturing industry, where the IoT helps to reduce costs while maximizing efficiency using advanced energy and supply chain optimization and by offering predictive maintenance and worker safety. In addition, the Industrial IoT (IIoT) is being touted as the basis of the next generation of manufacturing innovation, also called Industry 4.0. Although the complete integration of manufacturing and networking is still a long way off, the SATS market is expected to witness exponential growth over the next five years.
But let’s not forget the shortage…
The rising and well-known shortage of semiconductors is one of the factors hindering the semiconductor assembly and testing services market growth. With the rising demand for products enhanced by a growing volume of chips, semiconductors chips will be in short supply throughout 2022. The chip shortage is expected to last for another two years before it recedes, similar to the situation in the 2008-2009 chip shortage.
In mid-2021, customers were waiting between 20 and 52 weeks for multiple kinds of semiconductors, causing manufacturing delays or shutdowns, which led to revenue losses in the tens or even hundreds of billions of dollars. For instance, in 2021, automotive industry manufacturing was shut down due to the shortage of semiconductors. By the end of 2022, lead times will be closer to 10-20 weeks and the industry will be in balance by early 2023. These factors will impact the semiconductor assembly and testing services market during the forecast period.
The key markets for this are China, Taiwan, Japan, and South Korea. Market growth in this region will be faster than the growth of the market in South America.