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10 Mar 2021

Econ Digest

Recovery in Global Automotive Market and 5G Booming: Supporting the Growth of Thai Chip Packaging Business


     The COVID-19 pandemic over the past year has brought changes to the business sector and consumers, and prompted them to increasingly use digital technology in their businesses and daily life. At the same time, the transition to 5G technology and smart electrical appliances has been accelerated, thus pushing up the global demand for chips or integrated circuits (ICs) as the main component of technology products. Additionally, global demand for chips has been driven by faster-than-expected recovery in the global automotive market, especially the electric vehicle market that has 92% more chip components than traditional vehicles.

    The growth trend in the technology products market and the increasing demand for chips have benefited the OSAT business, because chip manufacturers often outsource chip assembly and testing to OSAT operators to increase management flexibility and reduce investment in OSAT R&D. This is a great opportunity for OSAT operators in Thailand, which held about 7.5% of the global market share last year and was ranked 12th in the world.

KResearch expects that factors such as gradual improvement in the global economy, the transition to 5G technology and the start of demand recovery in the global automotive market will drive the overall Thai OSAT market to grow at an accelerated rate of 5.2% to approximately USD2,478 million in 2021. The accelerated growth of the Thai OSAT market over the last year has been due to the strategic tendency of Thai operators to focus on fast-growing products, such as telecommunications and automobiles. In addition, smartphone chip manufacturers have gradually shifted orders from Malaysia to Thailand to maintain business continuity during the COVID-19 outbreak in Malaysia, which also contributed to the accelerated growth of the Thai OSAT market this year.

             Looking ahead, Thailand's OSAT business should have competitive potential and be able to meet the growing demand. However, Thailand’s chip packaging products are still primarily mid-range chips, such as sensor chips and control chips that are designed to determine specific tasks. As for high-end chips such as processing chips that assist in driving, Thai operators do not have the technology to enter this chip packaging business.  Therefore, in order to find more extensive business opportunities in the future, the upgrading of packaging technology is an important issue that must be considered, as well as continuously promoted and supported.

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Econ Digest