Market Trends of Semiconductor Test Equipment Industry
Semiconductor Automated Test Equipment (ATE) to Hold Significant Market Share
- Owing to the expansion of IoT applications, smart devices, and small semiconductors are becoming more prevalent, driving demand for advanced semiconductor automated testing equipment.
- According to Ericsson, the number of connected devices worldwide will almost double between 2022 and 2028. This growth is expected to be driven by a rise in short-range IoT devices, with a forecast of 28.72 billion such devices by 2028. Connected devices include wearables, connected cars, and smart sensors.
- Automated testing equipment reduces manufacturing costs and time and increases productivity. The ongoing development of complex devices for better applications drives demand for high-throughput test equipment. An ATE can eliminate false test report results by automating processes susceptible to human mistakes. When testing is done automatically, test results are uniform and cannot be distorted, guaranteeing consistency in product quality. An ATE can help reduce testing costs by reducing the time and materials required. This can be achieved by using programmable functions on ATEs that automate test sequences.
- The growing adoption of smart electronics components and advanced technologies such as ADAS, infotainment systems, and AI assistants in today's vehicles creates significant growth opportunities. ATE systems allow for detailed testing of components such as ECUs, sensors, and infotainment systems, guaranteeing reliability, functionality, and compliance with automotive industry norms.
- According to the IEA, EV sales were expected to continue to surge in 2023. Approximately 2.3 million electric cars were sold in the first quarter alone, representing a 25% increase from the same period last year. This growth is largely attributed to national policies and incentives, as well as high oil prices, which are motivating prospective buyers. The increased demand for electric and connected vehicles will drive the ATE market growth.
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Asia-Pacific to Hold Significant Market Share
- China holds a significant share of the testing equipment market. The country is pursuing an ambitious semiconductor agenda with USD 150 billion in funding. The country aims to enhance its domestic IC industry and increase its chip production.
- The ongoing US-China trade war has intensified tensions in this crucial sector, where the most advanced process technology is concentrated, leading many Chinese companies to invest in semiconductor foundries. China has unveiled various initiatives to strengthen its semiconductor sector, such as a substantial expansion campaign in the foundry, gallium-nitride (GaN), and silicon carbide (SiC) markets. The growing semiconductor business and increasing chip production capabilities in the region are expected to drive the demand for testing equipment. China's tech industry aims to ascend the global technology value chain by capitalizing on its strong presence in telecommunications, renewables, and electric vehicles (EVs). In addition to these sectors, the industry is now focusing on advanced semiconductors. This transition is primarily driven by advancements in advanced node manufacturing, the expansion of the memory market, active involvement in the silicon carbide (SiC) race, and strategic investments in advanced packaging and manufacturing equipment. The growing foundry business and investments in fabs throughout China are anticipated to stimulate market growth.
- Moreover, China and the United States are growing competition over semiconductor intellectual property and manufacturing. The United States is taking steps to boost its chip production while imposing sanctions to hinder China's efforts to achieve self-reliance in this crucial industry. As a result, the region is making significant investments in the semiconductor manufacturing and testing business to enhance its self-reliance capabilities. An example is the recent announcement in September 2023 of China's new state-backed investment fund, which aims to raise approximately USD 40 billion for the semiconductor sector. This fund will primarily focus on acquiring chip manufacturing equipment to catch up to the United States and other competitors.
- The expansion of foundries directly impacts the growth of the testing equipment market. Through the incentive package, Beijing intends to enhance its assistance to Chinese chip companies in constructing, expanding, or upgrading domestic facilities for fabrication, assembly, packaging, and research and development.
- Further, according to IEA, China accounted for nearly 60% of all new electric car registrations worldwide in 2023. This region is primarily dominated by companies like BYD and others, which are making significant investments in the production of electric vehicles. The growth of the EV sector in the region is expected to drive the market’s potential.
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