South Korea’s OSAT (Outsourced Semiconductor Assembly and Test) companies are currently enjoying their times due to positive performance from 2019. Amounts of supplies that need to be packaged have increased as Samsung Electronics’ System LSI Business has increased its supply of outsourced chips.
According to the industry, increased supply of Samsung Electronics’ system semiconductor chips in 2019 leading to increased sales of OSAT companies is drawing eyes from the industry.
NEPES’ 2019 operating profit recorded $49.4 million (60 billion KRW), which is an 175.7% increase compared to that of 2018, and NEPES has been enjoying its positive performance. NEPES possesses WLP (Wafer Level Package) technology that packages PMIC (Power Management Integrated Circuits) and AP (Application Processor) in a wafer form.
LB Semicon, which specializes in the bumping process, made $41.5 million (50.4 billion KRW) in operating profit in 2019 which is an 83.7% increase compared to that of 2018. The bumping process connects a semiconductor chip that has “bumps” formed on it with an outside connecting terminal.
TESNA, which specializes in wafer and package tests, made $19.8 million (24 billion KRW) in operating profit last year which is an 28.3% increase compared to that of 2018. SFA Semiconductor, which is beginning to increase the percentage of system semiconductor chips packaged following memory semiconductor chips, also experienced its 2019 operating profit, which was $32.2 million (39.1 billion KRW), increase by 16% compared to its 2018 operating profit.
OSAT companies are responsible for the back-end process after the semiconductor wafer process. South Korean OSAT companies have benefited from a natural increase in demands for outsourced packaging when Samsung Electronics has increased its production of system semiconductor chips.

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<An employee from NEPES is examining a wafer going through packaging process under a microscope. (Reference: NEPES)>

In case of NEPES, it is understood that it has seen increased orders for packaging as Samsung Electronics recently internalized its own chips along with production of 5G smartphones. LB Semicon is affiliated to LG Group. However, it had drawn attention when it carried out the bumping process of PMIC and increased supplies of DDI (Display Driver IC) for Samsung Electronics. It is heard that TESNA is responsible for carrying out the highest number of tests for Samsung Electronics’ outsourced chips.
These companies have been busy with making investments as they expect that high demands for OSAT will not die down any time soon.
NEPES is currently in the final stage of constructing a new PLP (Panel Level Package) line at its plant in Cheongan. Also, it established a fan-out packaging subsidiary called “NEPES Laweh” and is going to invest $247 million (300 billion KRW) until 2024.
TESNA invested $22.2 million (27 billion KRW) in last October and started a new investment in plant and equipment regarding image sensor that has become a general trend recently. It is understood that SFA Semiconductor is also increasing its production capacity through steady investments.
Some people within the industry believe that the spread of COVID-19 can have a negative impact on demands for packaging. They believe that there is a high chance that the packaging process that assembles chips inside of electronic devices can be heavily affected as the global home appliance and smartphone markets struggle.
“COVID-19 has yet to impact OSAT companies’ sales as OSAT companies have been handling orders received from last year.” said a representative for the industry. “Although a possibility of a growth will not be affected, increased demands for packaging cannot be guaranteed anymore starting from this second quarter as the aftereffect of COVID-19 continues to linger.”
Staff Reporter Kang, Hyeryung | kang@etnews.com