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Semiconductor Industry Speaker Series - Stephen Rothrock - US-China Trade War: The Tariff Effects on the Global OSAT Market
MEPTEC & IMAPS Semiconductor Speaker Series
US-China Trade War: The Tariff Effects on the Global OSAT Market
Stephen Rothrock
Founder, President & CEO, ATREG, Inc.

The escalating trade war between the United States and China has left the global semiconductor industry in uncertainty over the past couple of years. After the U.S. imposed tariffs on more than $550 billion of Chinese imports and China retaliated by imposing tariffs on more than $185 billion on U.S. goods, Phase 1 of a trade deal struck on January 15, 2020 between both governments finally provided relief, but some U.S. tariffs still remain on $250 billion of Chinese imports. Because of the slow recovery of trade, the global growth forecast has been marked down for 2020-2021. U.S. manufacturing output alone has fallen significantly over the last 11 months as tariffs have caused more manufacturing job losses than gains. Despite that, semiconductor company stocks have still soared over the past year, with the Philadelphia Semiconductor Index SOX up 56% over last year as opposed to the S&P 500 only up by 25.6%.

So what does this situation mean for the global OSAT market? The increased demand from automotive sub-systems and connected devices is the main driving force behind a forecast CAGR of 6% between 2020 and 2025 for the sector.
Smartphones were the biggest customer of OSAT providers, with more than 1 billion shipments every year. But the market is saturated and declining. Furthermore, the industry remains extremely competitive, but the introduction of 5G is going to bring a new lease of life to the market. The widespread implementation of IoT devices and AI means that newer chips are being developed by smaller players in the market who lack testing and packaging infrastructure. Chip providers are forced to introduce new products with a short duration. The chip makers are also trying to integrate as many components as possible into a single chip which further drives complexity.

Jul 1, 2020 11:30 AM in Pacific Time (US and Canada)

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