The Significance Of Outsourced Semiconductor Assembly And Test (OSAT)

OSATs can be an excellent vehicle for expanding semiconductor manufacturing regions due to the fact that they demand less investment than semiconductor FABs and generate attractive revenue.

Fremont, CA: Outsourcing is one of the many strategies to optimize internal business operations, which is why the majority of businesses in the field rely heavily on it. In the long run, outsourcing a portion of the product development process to an external vendor not only improves operational efficiency but also affords the opportunity to maximize internal resources. Outsourcing is also a significant factor in the semiconductor sector. More than the design, the production component of the creation of a semiconductor product relies on the services of external vendors. FABs (Pure-Play Foundries) and OSATs are the two basic instances of semiconductor outsourcing.

The global semiconductor scarcity has revealed the significance of semiconductor FABs. This is the major reason why countries across the globe are offering Pure-Play Foundries lucrative incentives to establish new FABs. However, from the perspective of semiconductor production, semiconductor FABs supply only fifty percent of the services required to bring a product design to life. The remaining fifty percent depends on Outsourced Semiconductor Assembly and Test, or OSATs.

Test and packaging are essential components of semiconductor manufacturing, and OSATs supply these services. OSATs invest extensively in equipment and methods that enable testing of various types of wafers/parts in addition to delivering high-tech packaging solutions driven by research. The costs associated with managing the testing and packaging procedure are the primary reason why the bulk of semiconductor companies outsource. As a result, several OSATs have sprung up all over the world over the past four decades. However, their increasing significance is the primary reason why the semiconductor industry should also focus on OSATs when creating additional manufacturing capacity, rather than focusing solely on semiconductor FABs, which supply only half of the semiconductor product development process.

Even though there are numerous OSAT providers on the market, only a few are well-known and have developed their business and market share over the past few decades. While this is undoubtedly good news for the growth of the semiconductor industry, it is slowly posing a difficulty comparable to that of the semiconductor FABs, where a handful of firms drive the semiconductor back-end business. The same is true in the OSAT industry, where a handful of companies are increasing their market dominance and making the semiconductor supply chain reliant on them.