With advanced packaging rapidly becoming a new front in the global conflict over chips, some argue it’s long overdue.
The administration has until now focused on subsidies to bring back chipmaking to the US, but “we can’t ignore packaging because you can’t do one without the other,” said Representative Jay Obernolte, a California Republican who is one of two vice-chairs of the Congressional Artificial Intelligence Caucus. “It wouldn’t matter if we did 100% of our chip manufacturing onshore if the packaging is still offshore,” he added.
Assembly, testing and packaging – usually considered together as “back-end” manufacturing – was always the least glamorous end of the semiconductor industry, with less innovation and lower added value than the “front end” business of making chips with features measured in the billionths of a meter. Yet the level of sophistication is rising fast as new technologies enable chips to be combined, stacked and their performance enhanced in what industry executives are calling an inflection point.
Advanced packaging can’t help China compete with leading-edge semiconductor developments from the U.S., but it allows Beijing to build faster, cheaper systems for computing by stitching together different chips closely together. In that case China could save its latest chip technology, which is expensive and likely available in limited volume, for the most important part of the chip and use older, cheaper technologies to make chips that carry out other functions like battery management and sensor controls, combining the whole in a powerful package.
It’s a “pivotal solution,” said Bloomberg Intelligence technology analyst Charles Shum. “It doesn’t merely enhance chip-processing speed but crucially enables seamless integration of varied chip types.” As a result, he said, it’s “set to reshape the semiconductor-manufacturing landscape.”
Beijing has long made a strategic priority of semiconductor packaging technologies, including in President Xi Jinping’s Made in China program announced in 2015. China has 38% of the world’s assembly, testing and packaging market, the most of any nation, according to the US-based Semiconductor Industry Association. While it lags behind Taiwan and the US in advanced technology, analysts agree that unlike in wafer processing, it’s in a much better position to be able to catch up.
China already boasts the most back-end facilities by number, including the world’s third-largest assembly and testing company, JCET Group, which trails only Taiwan’s ASE Group and Amkor Technology of the US in revenue. What’s more, Chinese companies are building market share, including through JCET’s acquisition of an advanced facility in Singapore and construction of an advanced packaging plant in its hometown of Jiangyin.
“For China, one way around technology transfer restrictions is advanced packaging, because so far it’s a safe space that everyone invests in,” said Mathieu Duchatel of the Institut Montaigne think tank, a Taiwan-based China expert who studies the geopolitics of technology.
It’s a realization now touching Washington as it seeks to deny Beijing access to the kind of advanced computing technologies that could be put to military use – with questionable success.
When Huawei Technologies Inc. quietly released its Mate 60 Pro smartphone in September, China hawks in Washington raised questions as to why US export controls had failed to prevent a development supposedly beyond Beijing’s capabilities.