What Automotive Factors Are Boosting Advanced Packaging?

Two automotive megatrends, autonomy and electrification are today pushing the development of multiple devices with dedicated packaging. Without doubts, the automotive sector is changing – or put another way, is finally open to change and adopting disruptive technologies such as advanced packaging.

The market research & strategy consulting company Yole announces its new advanced packaging report, ‘Automotive Packaging: Market and Technologies Trends’. After a 1st edition published in 2018, the advanced packaging team pursued its investigation to refine its understanding of the technologies, the related issues and the automotive ecosystem.

Today, Yole analysts have presented a complete and detailed report with detailed packaging forecast, by application and device. This 2019 edition reveals key packaging market figures and trends for CIS, LiDAR and radar. It also includes dedicated sections focused on computing (ADAS computing and AI for infotainment) and memory (DRAM, NAND).

In addition, Yole’s advanced packaging team propose a comprehensive analysis of the supply chain changes with three different scenarios alongside OSATs and IDMs automotive packaging market partition.

Today’s automotive industry is transforming in preparation for the vehicles of tomorrow. Vehicle autonomy and electrification trends, along with comfort and safety, are driving these changes, which are occurring on every front: supply chain, business models, players, and technologies, down to packaging and materials.

According to Yole’s automotive packaging report, the total calculated packaging market will exhibit a +10% CAGR between 2018 and 2024. It will grow from $5.1bn in 2018 to around $9bn in 2024. Traditionally a conservative industry, automotive players have begun adapting their approach to today’s quickened technology pace.

“Packaging is one of the fields where changes are manifesting, and affirming the growth of advanced packaging usage,” said Mario Ibrahim from Yole. “In 2018, advanced packages accounted for only 3% of the total automotive packaging revenue: the other 97% was attributed to legacy packaging. But in 2024 advanced packaging will double its share, reaching six percent of the total accessible market and accounting for $550 million, which is four times its 2018 revenue.”

Despite the obvious domination of legacy packaging, advanced platforms will continue their breakthrough into automotive, driven by autonomy applications like ADAS computing, along with vehicle electrification’s need for new advanced packages.

But what is the impact at the supply chain level? Introduction of new systems like HPC units and the need for higher in-car cyber security, are few reasons behind potential supply chain changes in the future. Conventional car makers like Audi, Toyota, and Volkswagen will lead the consumer automotive business, while so-called ‘service providers’ like Uber, Lyft, Waymo, and Baidu will spearhead the robotic vehicle supply chain.

Besides car makers, if we descend the supply chain pyramid we find system makers that can also be module makers. Yole identified for example, Denso and Delphi. Component and module makers, which include companies like Infineon Technologies, NXP, Robert Bosch, and others, are the next link in the supply chain, following companies offering manufacturing and packaging services: TSMC, Amkor, ASE, and UTAC.

According to Yole, different supply chain scenarios are possible. Manufacturing and service companies will be less impacted, since car makers will continue relying on them:

• One possible mid-term scenario calls for expanded involvement of car makers in the supply chain, bypassing system makers and working directly with component and module makers. This scenario is supported by the need for a smaller supply chain, with higher engagement in developing the hardware for specific applications directly linked to vehicle security. This is similar to what Toyota is doing with Denso, and what Audi is researching.
• Another approach is one where the car maker integrates the entire supply chain in-house, with the exception of manufacturing and packaging. Tesla is trying to create this scenario by internally developing some of the hardware and software for its cars. This path is risky and costly, and should only be attempted either through very close partnerships and/or M&A.