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News Article

Advanced packaging market to top $120B

Thursday 23rd July 2026

News

Yole Group forecasts advanced packaging will become the dominant segment of the semiconductor packaging industry, driven by AI, HBM, and high-performance computing demand.

The global advanced packaging market is expected to more than double in value over the next six years, growing from $55 billion in 2025 to more than $120 billion by 2031, according to Yole Group's latest Status of the Advanced Packaging Industry 2026 report.

The report highlights a structural shift in the semiconductor industry, with advanced packaging moving beyond its traditional backend role to become a key enabler of AI computing, high-bandwidth memory (HBM), power delivery, thermal management, and overall system performance.

By 2031, advanced packaging is expected to account for the majority of semiconductor packaging revenue.

Yole notes that pricing power has returned to parts of the market, although it remains concentrated in AI packaging, HBM packaging, memory testing, and high-end substrate technologies where capacity and qualification barriers are highest.

In contrast, mature packaging segments continue to face pricing pressure from commodity inflation, currency fluctuations, and increasing competition. The report also identifies several critical supply chain bottlenecks.

TSMC's CoWoS capacity, Ajinomoto's ABF substrate materials, and Nittobo's T-glass products remain key enablers of leading-edge AI packaging, while companies including ASE, Amkor, PTI, SK hynix, Ibiden, and Unimicron are investing in capacity expansions.

However, many of these projects are not expected to come online until 2027–2028, suggesting supply constraints will persist in the near term. Yole further highlights the growing influence of geopolitics on the packaging ecosystem.

While countries including the US, India, Japan, Malaysia, Vietnam, South Korea, and several European nations are investing in advanced packaging and substrate manufacturing, leading-edge production remains concentrated in Taiwan, Japan, and South Korea, supported by established materials, equipment, and manufacturing ecosystems.

According to Yole Group, understanding pricing dynamics, capacity expansion, and supply chain bottlenecks will be increasingly important for semiconductor manufacturers, OSATs, and investors as advanced packaging continues to underpin the next generation of AI and high-performance computing systems.