Chinese OSAT firms experience widespread financial downturn, anticipating rebound in 2024

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

Amid the downturn in the semiconductor industry, China-based major OSAT players are seeing a sharp drop in their growth, and some even witnessed net losses for the first half of the year. China-based OSAT companies expect recovery to arrive in 2024.

Major China-based OSAT companies released their financial results for the first half of 2023, and figures show that major China-based OSAT companies saw their annual revenue growth drop from double digits in 2021 and 2022 to single digits in the first half of 2023.

The annual revenue growth for Tongfu Microelectronics fell from more than 50% in 2021 to just more than 3% in the first two quarters of 2023. Shenzhen Kaifa Technology saw sales growth year-over-year of 7.75% and -2.41% for the period. JCET, Tianshui Huatian, and China Wafer Level CSP reported a double-digit fall in sales during the first half of the year.

Thanks to rising demand for HBM (high bandwidth memory), Wuxi Taiji Industry was the only China-based major OSAT player that maintained stable growth of double digits for the period. Wuxi Taiji Industry is a supplier of SK Hynix, reports Chinese media Sina.

Still, all major China-based OSAT companies witnessed sharp falls in their net income in the first half of the year. Despite rising orders of HBM from SK Hynix, Wuxi Taiji Industry reported five quarters of negative growth year-on-year in net losses in a row.

Amid the slump in the chip industry, R&D activities of China-based OSAT players also slowed. TongFu Microelectronics' R&D expenditure to sales dropped from more than 10% in the third quarter of 2021 to 1.3% and 2.85% in the first two quarters of the year. The R&D to sales of JCET remained about 10% in most quarters of 2021 and 2022 but dropped to 3.41% and 6.65% in the first two quarters of 2023.

Sina reported that due to weak demands for end products, the OSAT industry expects a recovery in 2024. According to Jiwei, TongFu Microelectronics said that its packaging and testing business faced significant challenges in the first half of the year, and the company is eyeing innovative technologies, such as chiplets, and revolutionary applications, like generative AI, to generate opportunities in the long term. TongFu Microelectronics also pins its hope on AMD's upcoming chips.

Soure: Bloomberg, September 2023

Soure: Bloomberg, September 2023

Soure: Bloomberg, September 2023