In the first week of August, the global semiconductor market signaled another price increase, this time led by Singapore. Industry chain reports indicate that the packaging and testing giant STATS ChipPAC, headquartered in Singapore, is preparing a new round of price adjustments, planned for gradual implementation in the second half of 2026, with some customers having already received price increase notifications. STATS ChipPAC has confirmed the price adjustment plan, but the final increase will be determined based on the product category and negotiations with customers. Price Adjustment is Not a "One-Size-Fits-All": Comprehensive Coverage from Traditional Packaging to 2.5D/3D Insiders revealed that this round of price adjustments is not a uniform blanket increase. The scope covers traditional Wire Bond and Flip Chip packaging, extending to WLP, Fan-Out, SiP, and advanced 2.5D/3D packaging platforms. This means the price pressure is not solely concentrated in high-end AI-related packaging but has spread to multiple mainstream packaging products, reflecting the simultaneous changes in the supply-demand relationship and cost structure of the packaging and testing industry. For the semiconductor industry in Singapore, STATS ChipPAC is a landmark entity. This company manages its headquarters in Singapore and has major production bases in Singapore and South Korea. It is one of the earliest players in the global OSAT sector to establish advanced packaging in Singapore, serving numerous top-tier international chip design companies across end-markets such as consumer electronics, communications, automotive, and data centers. After being acquired by JCET in 2015, STATS ChipPAC operates independently as JCET's overseas operation and production platform, also helping the parent company open advanced packaging channels to global leading customers. Cost and Demand Drive: Why Are Packaging and Testing Companies Collectively Raising Prices? STATS ChipPAC's planned price adjustment occurs amid the ongoing trend of price reassessment in the global packaging and testing industry. Since 2025, the prices of raw materials such as gold, copper, and packaging substrates, as well as wire frames, have continuously risen, putting pressure on the cost side of packaging and testing manufacturers. Concurrently, the rapid increase in demand for AI chips, high-density memory, and power management modules has further driven up the demand for advanced packaging like 2.5D/3D, leading to tighter supply in power management chips, network communication chips, and some mature packaging capacities. In fact, this is an industry-wide price surge. In early July this year, the global packaging leader ASE announced another price increase for packaging quotes, with the maximum increase exceeding 20%. The scope of the price adjustment covers advanced packaging processes such as CoWoS and FoCoS, and its core customers in the United States were all included in the adjustment. Mr. Wu Tianyu, COO of ASE, explained that the price increase is based on two main considerations: first, reflecting the rise in raw material prices, which is a rigid necessity; and second, covering the investment costs corresponding to the significant capital expenditure increase recently. Public data shows that ASE's annual capital expenditure has increased from approximately $2 billion in the past to $5.3 billion in 2025, and is further raised to $8.5 billion in 2026. Furthermore, Taiwanese memory and packaging manufacturers saw price increases approaching 30% in the first half of the year; domestic packaging and testing companies such as JCET, InWin, Huatian Technology, Jingshi Technology, and Yongxi Electronics also implemented price increases of varying magnitudes in the first half of the year. Tight Capacity, Urgent Expansion: Supply-Demand Tightness May Continue Until 2027 Behind the price hike is the persistent shortage of advanced packaging capacity. With the sustained strong demand for high-computing power chips and HBM from AI, the supply of 2.5D/3D advanced packaging cannot meet demand, and the industry generally predicts that the tight supply-demand pattern will continue until the second half of 2027. Data from market research firm Yole shows that the global advanced packaging market size was approximately $54 billion in 2025 and is expected to grow to $109 billion by 2031, achieving a doubling of scale, with 2.5D/3D packaging becoming the main driver, powered by the rapid development of the AI industry. Amid the capacity shortage, packaging and testing manufacturers both domestically and internationally are launching a new round of expansion competitions. ASE is advancing the construction of 15 new sites at an "unprecedented" speed, with the first wafer-scale packaging mass production line expected to be operational by the end of this year; A-share packaging and testing companies such as Longking, Tongfu Microelectronics, Huatian Technology, and Yongxi Electronics have also announced intensive expansion plans, with total investments approaching 35 billion RMB. Taking Yongxi Electronics as an example, the company disclosed plans to invest 10.3 billion RMB in the third phase of IC packaging and testing in late June. Concurrently, ASE has signaled tightening capacity—according to industry insiders, its major global production bases are operating at saturation or near-saturation levels, and the company previously stated that it would further select customers and optimize product structures to continuously increase the unit value of its products. Singapore: A Key Hub in the Southeast Asian Packaging and Testing Landscape The recent price adjustment by SK Hynix further strengthens Singapore's role as a semiconductor hub in Southeast Asia. In recent years, Singapore has attracted increased investment from global semiconductor giants such as Micron, Geode, and Advanced Micro Devices due to its stable policy environment, complete logistics system, and talent pool. Recently, the joint venture 12-inch wafer fab VSMC, involving Advanced Micro Devices (VIS) in Singapore, is proceeding as planned and is expected to start production in the first quarter of 2027. The manufacturing PMI in Singapore remains in expansion, and the electronics sector PMI has been above the turning point for several months. Packaging and testing, as a link in the industry chain close to the end-user and receiving design requirements, is becoming a crucial link in the Singapore semiconductor cluster. From a broader perspective, this round of packaging and testing price increases is another signal of the AI semiconductor supercycle being transmitted to downstream industries. After wafer fabrication, memory, and materials sequentially entered the price increase cycle, the bargaining power of the packaging and testing segment is also quietly recovering—from ASE to SK Hynix, from advanced packaging to traditional packaging, "price increases" are becoming a keyword for the packaging and testing industry in 2026. Future Outlook: Sustained Boom and Potential Variables Looking ahead to the second half of the year, multiple institutions maintain an optimistic outlook on the packaging and testing industry. Citibank predicted in a recent report that Chinese packaging and testing prices may continue to rise in the second half of 2026 due to tight capacity utilization; CICC also pointed out that the utilization rate in the packaging and testing sector is continuously improving, and the price increase pace is clear. Several industry insiders stated that the combination of continuously growing market demand and rising raw material prices makes a price increase in the second half highly likely. However, potential uncertainties are also worth noting. On one hand, if the growth rate of AI capital expenditure slows down temporarily, the ultra-high boom of advanced packaging may face a correction; on the other hand, after the industry collectively expands capacity, the window for the concentrated release of new capacity may fall between 2027 and 2028, at which time price pressure will reappear. For the purchasing side, the packaging and testing price increase has evolved from an "isolated phenomenon" to an "industry trend," and securing capacity and optimizing the supply chain structure may become key topics in procurement decisions in the second half of the year. From an investment perspective, the price adjustment trends of Xingke Jinpeng are viewed by the market as an important barometer for observing the global packaging and testing industry's vitality. As the introduction of new products at its overseas factories accelerates and demand related to AI and data centers gradually increases, the pricing trajectory of packaging and testing capacity in Singapore may continue to influence the global semiconductor market. For investors tracking the semiconductor market, the price increase cycle in the packaging and testing segment may be another vital sign to follow, after wafer fabrication and memory, and this round of signals is emanating from Singapore.
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