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The Impact of the CHIPS Act on Asian OSATs and Supporting Engineering Resources
The semiconductor industry is undergoing a significant transformation with the implementation of the U.S. CHIPS and Science Act, which aims to bolster domestic semiconductor manufacturing and reduce dependency on foreign supply chains. While this legislation primarily benefits U.S.-based semiconductor foundries, it has profound implications for outsourced semiconductor assembly and test (OSAT) companies and engineering resources in Asia.
1. Shift in the Global OSAT Landscape
OSAT companies in Asia—particularly in Taiwan, China, Malaysia, and the Philippines—have traditionally played a crucial role in the global semiconductor supply chain. However, with U.S. companies incentivized to relocate semiconductor production and packaging back to domestic soil, Asian OSATs may face challenges such as:
Reduced demand from U.S. fabless companies: The global OSAT market was valued at $38.4 billion in 2023 and is expected to grow at a CAGR of 6.5% through 2028. However, the CHIPS Act’s $52.7 billion funding for U.S. semiconductor manufacturing and advanced packaging could shift business away from Asian OSATs.
Competitive pressure from U.S.-based OSATs: Intel, through its $3.5 billion investment in New Mexico, and TSMC’s Arizona facility are investing in advanced packaging technologies, creating more localized competition.
Increased regulatory scrutiny: U.S. export restrictions on China, particularly on AI chips and advanced semiconductor technology, are expected to impact China-based OSATs, reducing their market share in global semiconductor packaging.
2. Opportunities for Asian OSATs
Despite the challenges, there are potential opportunities for Asian OSATs:
Partnerships with U.S. firms: The OSAT industry remains concentrated in Asia, with Taiwan, China, and Malaysia accounting for over 70% of global capacity. While the U.S. is increasing domestic investments, many companies may still rely on Asian partners due to cost efficiency.
Growth in non-U.S. markets: The semiconductor assembly and test market in India is projected to grow significantly, with India aiming to attract $10 billion in semiconductor investments over the next few years.
Specialization in niche segments: High-reliability packaging for automotive, IoT, and AI-driven applications is expected to grow, allowing Asian OSATs to focus on specialized services.
3. Impact on Engineering Resources and Talent
The CHIPS Act could lead to talent redistribution and demand shifts in semiconductor engineering:
Increased demand for packaging engineers in the U.S.: The U.S. needs at least 90,000 new semiconductor workers by 2030 to support domestic expansion, including in packaging and testing.
Potential talent drain from Asia: The U.S. is actively recruiting semiconductor talent from Taiwan, South Korea, and other regions, offering competitive salaries and relocation incentives.
Upskilling needs in Asia: OSATs in Asia will need to invest in workforce training for advanced packaging, automation, and AI-driven testing solutions to remain competitive.
4. The Role of AI and Automation in OSATs
To mitigate potential disruptions, many Asian OSATs are exploring automation and AI-driven solutions in semiconductor testing and packaging. This includes:
AI-driven defect detection to improve yield rates and reduce reliance on manual inspection.
Automated material handling to enhance throughput and efficiency.
Digital twins and predictive maintenance to reduce downtime and optimize production workflows.
5. Future Outlook
The CHIPS Act is reshaping the semiconductor industry, but Asian OSATs are likely to remain critical players in the global supply chain. The key to sustaining competitiveness will be adaptability—whether through technological upgrades, market diversification, or strategic partnerships. Engineering resources will need to evolve with the industry’s changing needs, particularly in advanced packaging, AI-driven automation, and high-reliability testing.
While the U.S. is reinforcing its domestic semiconductor ecosystem, Asia remains a hub for cost-effective, high-volume OSAT operations. The next decade will see a dynamic interplay between regional semiconductor policies, global supply chains, and technological advancements, shaping the future of OSAT services and semiconductor engineering worldwide.
Conclusion Asian OSATs and semiconductor engineering resources must navigate the changing landscape brought by the CHIPS Act. By leveraging automation, developing specialized expertise, and adapting to new global supply chain dynamics, these companies can maintain relevance and competitiveness in an industry that is undergoing rapid transformation.