Understanding Advanced Packaging: Why Foundries are Investing Heavily
In the dynamic landscape of the semiconductor industry, one term has been making waves – "Advanced Packaging." This architectural marvel plays a pivotal role in linking, encasing, and safeguarding the minuscule silicon chips that power the sophisticated artificial intelligence (AI) devices and high-end technologies of today. The importance of advanced packaging cannot be overstated, as it stands at the forefront of ensuring seamless and high-performance operations, a crucial facet of the ever-evolving semiconductor ecosystem.
What is Advanced Packaging?
Chips rely on packaging to interconnect, enabling power supply, signal exchange, and overall functionality. The speed, density, and capabilities of semiconductor products evolve in response to the ever-changing and advancing methods of interconnection. With the rise of 5G, autonomous vehicles, Internet of Things (IoT) technologies, and virtual and augmented reality, high-performance,  energy-efficient chips capable of rapidly handling vast amounts of data are greater in demand. This is when advanced packaging is crucial in satisfying the increased demand for semiconductors that power emerging applications as they become mainstream.
Memory Packaging 2021 (Source: Yole Intelligence)
Historically, packaging was considered a less prestigious, blue-collar task, often outsourced. However, the paradigm has shifted drastically in recent years. With Gordon Moore's famous "Moore's Law," which predicted that the number of transistors on a microchip would double roughly every two years, hitting its limitations, the role of advanced packaging has transformed from a supporting act to a starring role in sustaining semiconductor progress.
Why Advanced Packaging Matters
1. Advancements in System Integration and Multi-Chip Solutions: As technology evolves, electronic devices are evolving to become more compact and versatile. System-in-package (SiP) packaging, a way of bundling two or more integrated circuits (ICs) inside a single package, allows miniaturisation and a higher level of integration. 
2. Addressing the Growing Complexity of Semiconductor Devices: As semiconductor designs become increasingly intricate, the demand for advanced chip packaging techniques rises. 2.5D and 3D packaging solutions, with their higher interconnect density and enhanced electrical performance, effectively tackle the challenges posed by these intricate designs. 
3. Enhancing Connectivity and Efficiency: Advanced packaging methods, including shielding and isolation, help in reducing signal loss and enhancing signal integrity. This results in enhanced internet connectivity and accelerated data transmission speeds.
4. Prioritising Energy Efficiency: In the realm of contemporary electronic devices, energy efficiency stands as a paramount concern. Innovations like fan-out wafer-level packaging (FOWLP) integrates power management, elevating energy efficiency. 
Major Players Driving Innovation
Leading industry players recognise the pivotal role of advanced packaging and have been spending big bucks its development. The Semiconductor Research Corporation's (SRC) Microelectronics and Advanced Packaging Technologies (MAPT) Roadmap , in collaboration with key industry organisations, sets the stage for the future of semiconductor technology. This roadmap extends the 2030 Decadal Plan for Semiconductors, identifying key drivers for innovation in smart sensing, memory, communication, security, and energy-efficient computing.
Intel has set its sights on a significant expansion, with plans to quadruple its capacity for cutting-edge chip packaging services by 2025. This expansion includes the establishment of a new facility in Malaysia, marking a strategic move by the United States' largest chip manufacturer to reclaim its position as a global leader in semiconductor manufacturing.  Not to be outdone, Amkor, the world's second-largest outsourced semiconductor assembly and test (OSAT) service provider, recently inaugurated its advanced packaging facility in Vietnam in October 2023. This substantial venture involves an estimated investment of approximately US$1.6 billion for the initial two phases of the plant. The primary focus of this facility is the production of advanced multi-chiplet system-in-packages featuring high-bandwidth memory (HBM). 
Additionally, Taiwan Semiconductor Manufacturing Company (TSMC) announced its intention to construct a state-of-the-art advanced chip packaging facility in the Tongluo Science Park. This project entails a substantial investment of roughly US$2.87 billion and is expected to employ approximately 1,500 individuals when it becomes operational in the coming years. 
The Future of Advanced Packaging
Advanced packaging revenues by platform (Source: Yole Intelligence)
In 2022, the advanced packaging market was valued at a staggering US$44.3 billion, and it is projected to exhibit a Compound Annual Growth Rate (CAGR) of 10.6% from 2022 to 2028, reaching US$78.6 billion by 2028.  High-end performance packaging, particularly for integrating dies with advanced nodes, is poised to contribute over 20% of the advanced packaging sector's revenue by 2028. Among advanced packaging platforms, 2.5D/3D technology is emerging as the fastest-growing, boasting a CAGR close to 40% during the same period. This indicates the industry's recognition of the need for innovative packaging solutions as we transition into a post-Moore era.
In conclusion, advanced packaging is not just a buzzword; it's a transformative force in the semiconductor industry. As technology continues to push boundaries, advanced packaging serves as the bridge to innovation, paving the way for more technological breakthroughs and advancements.
The future of the semiconductor distribution industry is intrinsically tied to advanced packaging. As semiconductor manufacturers embrace these cutting-edge packaging solutions, distributors play a vital role in ensuring the seamless flow of advanced packaged chips to the market. Efficient supply chains, quality assurance, and timely delivery become more critical than ever in the era of advanced packaging.
 Advanced chip packaging: How manufacturers can play to win, Mckinsey & Company, 2023
 Introduction to System in Package (SiP), anysilicon, 2023
 Trends and Development in Heterogeneous Integration: Advancing the Smart Digital Age with System-in-Package and Chiplet Technologies, 3DInCities, 2021
 THE POWER OF FAN-OUT WLP TO MAKE BETTER POWER ELECTRONICS, AND A BETTER WORLD, Brewer Science, 2023
 MICROELECTRONICS AND ADVANCED PACKAGING TECHNOLOGIES ROADMAP, MAPT, 2023
 Intel to quadruple cutting-edge chip packaging capacity by 2025, Nikkei Asia, 2023
 Amkor Builds $1.6 Billion Advanced Chip Packaging Factory, tom's hardware, 2023
 TSMC to Build $2.87 Billion Facility for Advanced Packaging, 2023
 Advanced semiconductor packaging: A new geopolitical battleground, Yole Group, 2023