Hua Chuang Securities: Advanced packaging is upgrading toward system-level integration platforms, and domestic companies are accelerating industrialization.

Hua Chuang Securities released a research report stating that the growth in AI/HPC demand is driving advanced packaging to upgrade from a back-end process to a system-level integration platform, and the global advanced packaging market is expected to reach US$67.4 billion by 2029; increasing process complexity is expected to drive the global advanced packaging materials market to grow to RMB164.7 billion by 2030, with the China market expected to reach RMB36.5 billion. Attention should be paid to the incremental material opportunities in the advanced packaging field, as the increase in process steps and upgrades in material performance will expand the introduction space for local suppliers. The main views of Hua Chuang Securities are as follows: The growth in AI/HPC demand is driving advanced packaging to upgrade from a back-end process to a system-level integration platform, and the global advanced packaging market is expected to reach US$67.4 billion by 2029 1) At present, advanced process scaling faces constraints in cost, power consumption, and yield, making it increasingly difficult to improve chip performance solely through transistor scaling. Chiplet and heterogeneous integration have gradually become important paths for continuing computing power growth. 2) AI accelerators need to integrate logic chips, HBM, and I/O chips within the same package, placing higher demands on memory bandwidth, interconnect density, and heat dissipation capability. Advanced packaging has thus become a key link affecting system performance and power consumption. According to Yole data, the global advanced packaging market size is expected to grow from US$40.76 billion in 2024 to US$67.44 billion in 2029, with a CAGR of 10.6%; the share of advanced packaging in the global packaging and testing market is expected to rise from 40.2% to about 50%. Chiplet and HBM are driving advanced packaging toward high-density lateral interconnection and 3D vertical integration 1) In terms of lateral interconnection, Fan-out uses multiple layers of RDL to fan I/O out from within the chip area to a larger area; 2.5D packaging achieves high-density interconnection among logic dies, HBM, and I/O dies through silicon interposers, RDL interposers, or local silicon bridges. 2) In terms of vertical integration, 3D packaging completes multi-layer die stacking through vertical channels such as TSVs, combined with micro-bumps or copper-copper hybrid bonding. As interconnect pitch continues to shrink, the connection form within the package is evolving from larger-pitch solder bumps to copper pillars, micro-bumps, and bumpless hybrid bonding. At the same time, to support larger package areas and improve warpage control, signal integrity, and manufacturing efficiency, technology routes such as large-size FCBGA, glass-core substrates, and panel-level packaging are developing faster. Global advanced packaging has entered the platform-based competition stage, and the industrialization pace of domestic companies is accelerating 1) TSMC, Intel, and Samsung have respectively built advanced packaging platforms around 3DFabric, EMIB/Foveros, and I-Cube/X-Cube. The scope of competition now covers design, wafer manufacturing, interposers, packaging, and testing, and advanced packaging capability has gradually become an important part of the high-end chip manufacturing system. 2) Domestic companies JCET Group Co., Ltd., TongFu Microelectronics, Tianshui Huatian Technology, SJ Semiconductor Corporation, and Forehope Electronic, based on flip-chip, wafer-level packaging, and SiP, continue to extend toward Fan-out, FCBGA, and 2.5D/3D packaging. Some projects have already entered mass production, small-volume trial production, or customer verification stages. Increasing process complexity is expected to drive the global advanced packaging materials market to grow to RMB164.7 billion by 2030, with the China market expected to reach RMB36.5 billion 1) Multi-layer RDL, fine-pitch bumps, TSVs, wafer thinning, and hybrid bonding will increase demand for packaging substrates, dielectric materials, photoresists, electroplating solutions, metal targets, CMP materials, and cleaning solutions; large-size and high-power packaging will drive underfill, molding compounds, adhesives, and thermal interface materials to upgrade toward low warpage, high reliability, and high thermal conductivity. 2) According to Frost & Sullivan data, the global advanced packaging materials market size is expected to grow from RMB104.4 billion in 2025 to RMB164.7 billion in 2030; the China market is expected to grow from RMB20.3 billion to RMB36.5 billion, with China's growth rate over the same period higher than the global rate. Risk warnings: risk of AI and high-performance computing demand falling short of expectations, risk of advanced packaging technology industrialization falling short of expectations, risk of long downstream customer certification cycles, risk of domestic material development progress falling short of expectations, risk of insufficient utilization of newly added capacity, risk of intensifying industry competition, risk of rapid technology route iteration, and risk of international trade frictions and supply chain risks.