Over the past six months, a significant change in the industry has been that advanced packaging has shifted from supporting roles to core functions for the first time.

HBM, CoWoS, ABF substrates, high-speed interconnects, power delivery, and advanced packaging capabilities are increasingly becoming bottlenecks in the supply chain.
Because AI chips are changing rapidly. Die sizes are getting larger, more HBM stacks, more chiplets, higher power consumption, and increased thermal density.
As a result, the complexity of each chip's packaging is beginning to rise non-linearly.
Advanced packaging is no longer just "encapsulating chips," but involves high-speed interconnects, thermal management, power delivery, HBM connections, yield in large-format packaging, and multi-die collaboration.
The more advanced the process, the more obvious this trend becomes.
Advanced process nodes are becoming more expensive, reticle limits are increasingly apparent, and single ultra-large dies are becoming more difficult.
Thus, the industry is shifting comprehensively toward chiplet, 2.5D, 3D stacking, heterogeneous integration, and hybrid bonding.
Essentially, when process technology hits physical bottlenecks, packaging continues to push performance growth.
Therefore, advanced packaging is increasingly resembling a "backend wafer fab."
Because RDL, TSV, micro-bumps, interposers, wafer-level processing, and hybrid bonding all require exposure, development, and patterning.
Hence, even though EUV is often not needed, advanced packaging has begun to become a new demand source for DUV, especially KrF and ArFi.
Because packaging pursuit is not about transistor density, but high-density interconnects.
Even in the most advanced packaging, feature sizes are usually still in the micron range, far larger than logic front-end processes.
EUV costs are too high, throughput is not cost-effective, and thick photoresist compatibility is poor.
The industry prefers to continue squeezing DUV.
Currently, advanced packaging mainly uses i-line, KrF, and ArFi.
i-line is mainly used for coarse RDL and traditional wafer-level packaging.
KrF has become a key technology for CoWoS, HBM, advanced fan-out, and interposers.
ArFi is beginning to enter HBM4/5, CPO, ultra-high-density RDL, and next-generation 3D packaging.
As RDL pitch continues to shrink, the importance of ArFi is rapidly increasing.
On the other hand, because traditional micro-bumps are becoming bottlenecks in bandwidth, heat, power, and pitch,
hybrid bonding copper-to-copper direct bonding is starting to rise.
Hybrid bonding requires extremely high overlay, flatness, and patterning accuracy, which will further increase the importance of DUV, CMP, bonding, X-ray inspection, and metrology.
The entire advanced packaging supply chain is also beginning to upgrade comprehensively.
Advanced packaging is no longer just "packaging equipment," but a complete backend manufacturing system.
In addition to lithography, it also requires electroplating, bonding, CMP, etching, inspection, underfill, and high-power testing.
For example, RDL, TSV, and micro-bumps rely heavily on copper electroplating, so the importance of Applied Materials, ASMPT, and Besi continues to rise.
Internal defects in HBM stacking can no longer rely solely on traditional optical inspection.
Thus, X-ray, 3D inspection, and overlay metrology are becoming increasingly important.
Because advanced packaging is so complex, it has driven improvements in ASP, profit margins, customer loyalty, and technological barriers.
This is also why, in the AI era, the OSAT industry is beginning to be re-priced.
Disclaimer: I hold the assets mentioned in this article; my views are biased and do not constitute investment advice. Do your own research.