Due to sustained AI and high-performance computing demand translating into rigid consumption of advanced packaging capacity, the sector is experiencing a golden cycle of simultaneous volume and price increases. This has led to explosive growth in the 2.5D/3D packaging market. The global advanced packaging market size is forecast to reach $58.7 billion in 2026, representing a year-on-year increase of approximately 97%.
The persistent high growth in demand for advanced packaging is expected to result in a supply shortage lasting until 2027, with a potential inflection point arriving in the second half of that year. Driven by AI computing power needs, the global semiconductor industry is undergoing an unprecedented cycle of supply-demand mismatch. The expansion of AI data centers is not only causing tight supply in memory chip manufacturing but also generating massive demand for the advanced packaging segment.
Research indicates that from 2022 to 2026, global advanced packaging capacity (defined here as 2.5D/3D packaging) will remain in a state of undersupply. For instance, the monthly demand for advanced packaging capacity in 2025 is projected to be about 146K wafers (converted to 12-inch wafer equivalents), with a supply-demand ratio around -23%, leading to order backlogs exceeding one year for many customers. In fact, since 2022, advanced packaging capacity has consistently been insufficient, requiring the industry to work through previous years' backlogs annually. This sends a continuous and urgent signal for capacity expansion across the packaging supply chain.
Amid this shortage crisis, packaging manufacturers are actively planning and expanding production to seize the opportunities presented by this industry upgrade. Data shows the global advanced packaging capacity will maintain a compound annual growth rate of 41% between 2025 and 2030, with a rate as high as 77% from 2025 to 2027. It is anticipated that by the second half of 2027, global advanced packaging capacity will reach a balance point and enter a period of relatively moderate growth.
As AI demand continues to propagate, the advanced packaging field is diversifying, with High Bandwidth Memory (HBM) packaging becoming a new growth engine for mainland Chinese manufacturers.
It is believed that against the backdrop of growing advanced packaging demand, TSMC is actively expanding capacity at new packaging and testing facilities while optimizing and integrating its existing mature-node foundry capacity, reallocating resources like factory space and manpower to its advanced packaging business. TSMC's advanced packaging capacity is forecast to grow roughly 84% year-on-year in 2026.
Traditional packaging giants like ASE and Amkor, besides benefiting from overflow orders from TSMC, are also accelerating their capture of advanced packaging market share by leveraging their deep capital reserves and scale advantages. ASE's capital expenditure for 2026 is as high as $7 billion, a historical record, with its advanced packaging business revenue expected to double year-on-year. Amkor, while cooperating with TSMC, is also promoting collaboration with
Mainland Chinese packaging manufacturers are seizing localization opportunities, developing rapidly in the advanced packaging sector, which is less impacted by geopolitics and technology controls. For example, leveraging its full-stack technology layout with advanced packaging as a breakthrough point, and through active cooperation with clients like Yangtze Memory Technologies and HiSilicon, JCET has achieved significant performance growth. Simultaneously, mainland Chinese companies are actively pursuing overseas market share. TFME, as a core supplier to AMD, has acquired 85% equity in two of AMD's production bases in Suzhou, China, and Penang, Malaysia, achieving a deep strategic partnership.
Furthermore, mainland Chinese manufacturers like
The advanced packaging sector is entering a "golden cycle," with panel manufacturers gradually entering the field. It is projected that against the backdrop of rising downstream demand and upstream packaging material prices, the price increase trend for advanced packaging will last at least until the end of 2026. In the future, as capacity demand adapts and diversified competition becomes normalized, advanced packaging price trends will gradually return to rationality, adjusting slowly in line with market dynamics.
Due to the high value of 2.5D/3D advanced packaging, its price is significantly higher than traditional 2D packaging. Compared to flip-chip packaging, 2.5D packaging prices can be over five times higher. This makes the advanced packaging business a notable growth driver, contributing considerable revenue for actively investing companies. Leading players like TSMC and ASE, with substantial accumulated technology and capacity plans, are expected to see their advanced packaging revenue share grow rapidly over the next three years. Mainland Chinese manufacturers are still in a catch-up phase regarding technology and capacity, and their business structures traditionally relied more on standard packaging orders. Their advanced packaging revenue is showing a growth trend, albeit at a relatively more moderate pace.
FOPLP (Fan-Out Panel Level Packaging), with its advantages in cost and packaging efficiency, is poised to become a mainstream technology path for 2.5D packaging as a low-cost solution, attracting significant attention from various players. Besides traditional packaging giants like TSMC, Samsung,
For instance, Innolux has successfully mass-produced FOPLP, established partnerships with traditional IDM giants like STMicroelectronics and NXP, and also provides RF chip packaging and testing for SpaceX. Other panel makers like BOE,华星, and Tianma are actively promoting FOPLP planning. Although FOPLP is still in its early technological stages, requiring another 2-3 years of accumulation to penetrate high-end products, its core value in cost, technology, and supply chain diversification is gradually becoming apparent, making it a strategic area that manufacturers cannot afford to miss in this new round of industry upgrade.
Additionally, BOE and Visionox are evaluating business opportunities in advanced packaging centered on supplying glass-based packaging substrates. On the other hand, South Korean panel manufacturers like Samsung Display and LG Display view glass interposers as a potential opportunity. Glass interposers, serving as intermediate substrates, enable high-density chip-to-chip interconnects in 2.5D packaging. Their importance is increasingly prominent in high-performance packaging structures combining AI accelerators with high-bandwidth memory.
Major panel manufacturers are attempting to break through the boundaries of traditional display panel manufacturing, expanding their business into the semiconductor packaging field. Advanced packaging is no longer an exclusive market for semiconductor packaging companies but is gradually becoming a new growth area where panel makers can leverage their existing manufacturing capabilities. As demand for AI semiconductors expands, HBM packaging demand grows, and 2.5D/3D packaging capacity remains tight, the technology paths chosen by panel manufacturers and the speed of their commercialization will become key focal points for the industry.
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