By Greg Gao

Chinese IC packaging substrate startup Chuanghao Semiconductor(浙江创豪半导体) sees growing demands for high-end IC packaging substrates despite that the overall markets go into a downward industry cycle.

Chuanghao Semiconductor launched a high-end packaging substrate project in Yiwu, east China’s Zhejiang Province, in July this year with newly raised investment funds. Tu Jiantian, founder of Chuanghao Semiconductor, said in a recent interview with JW Insights , “Although the demand for advanced packaging is currently lackluster, high-end IC substrate manufacturers will benefit from vast opportunity space from new market applications and China's domestic substitution efforts for a long time.” 

Chuanghao's project construction cycle and production capacity ramp-up speed require more time. It is expected that the semiconductor market will recover in 2024, and Chuanghao’s project will enter the mass production stage by that time, Tu added.

As an essential material for semiconductor packaging, especially driven by the rising demand for high-end chips, the demand for IC substrates began to rise rapidly at the end of 2019. The need for high-value IC substrates with larger sizes, higher layers, stronger functions, and more complex designs has grown significantly. Due to insufficient supply in the market and the slow release of new production capacity, IC substrates have been out of stock in the past three years.

According to electronics industry consulting firm Prismark’s data, the global IC substrate market size was $14.4 billion in 2021, and the compound growth rate is expected to be 13.1% between 2020 and 2026. The market size will reach $21.4 billion in 2026.

In the application markets, although the mobile device, PC, and consumer electronics markets are showing obvious weakness, the demand in cloud computing, servers, high-performance computing, automotive and industrial control, and other fields remains unabated. Those areas have become the new growth engines, and the demand for related mid-to-high-end IC substrates continues to rise.

In the first half of this year, the IC substrate market grew by about 47% compared with the same period last year. In the second half of the year, the growth rate slowed down due to the impact of sluggish consumer demand, but the overall growth trend is still unchanged, said Tu.

He explained more on the emerging factors behind the trend.  First, automobile intelligence and electrification have driven the continuous increase in the amount and value of automotive semiconductors.

Second, the increasing demand for high-performance computing such as cloud computing, big data, AI, and the explosion of the metaverse concept has boosted the high-speed development of HPC, GPU, and AI processors. As a result, the ABF substrate used in HPC/AI chips will maintain high growth in the next few years. 

Third, with increased 5G penetration, the rise of smartphone frequency bands continues to push the growth of the RF front-end market. The latter has increased demand for advanced packaging such as SiP under the trend of modularization, which in turn encourages the development of the high-end substrate market, Tu said.

The capacity expansion of wafer manufacturing and packaging & testing industries in China has brought broad growth space for domestic IC substrate manufacturers. This is the background for Chuanghao's establishment on July 8 this year. 

The project’s total investment is expected to exceed RMB10 billion($1.43 billion), which is expected to create more than 2,000 jobs. It is scheduled to be completed and put into operation in 2024.

Tu Jiantian said that his team had been engaged in research and development, manufacturing, and technical consulting services for many leading manufacturers of IC substrates from Chinese mainland and Taiwan since the 1990s, accumulating extensive experience.

Chuanghao Semiconductor secured its first round of financing from Inno-Chip(韦豪创芯), a well-known semiconductor industry investment firm in China. As one of the important founding shareholders, Inno-Chip could bring many resources to Chuanghao, including direct orders from startups, improving the team’s overall capabilities, and striving for favorable policy support, said Yu.