Key Takeaways: Foundries have been doing backend work for advanced packages. OSATs are now taking that on. This particularly affects 2.5D and panel assembly with new equipment and materials. Hybrid bonding is mostly a foundry activity now but will likely move to OSATs as well. Foundries and outsourced assembly and test (OSAT) houses have traditionally had distinct lanes, but the lines are blurring as OSATs acquire select foundry capabilities and foundries return some of the jobs they have taken from OSATs. “We’re at this bridging point where the IDMs and the foundries are doing more of what OSATs can do, and the OSATs are also trying to get much closer to what the foundry does at the back end,” said Raghu Nayak, head of sales at Zeiss. OSATs will never compete with foundries on advanced nodes and front-end wafer fabrication. But for backend activities, where dimensions aren’t as demanding, OSATs are acquiring capabilities that replicate what foundries can do. The biggest areas of overlap are 2.5D integration and panel assembly, with hybrid bonding likely to move there as well. The change affects equipment and materials. “We are seeing the migration of lithography-related materials and processes from traditional wafer fabs into advanced packaging environments,” said Poupak Khodabandeh, chief business officer at Brewer Science . “As advanced packaging increasingly relies on fine-pitch redistribution layers (RDLs), OSATs and packaging organizations are using materials and process flows that historically would have been associated with wafer fabrication.” “The industry has traditionally operated in silos across equipment, front-end fabrication, design, packaging, and test,” said Jack Berg, vice president of business development at Silvaco . “We need to connect those disciplines so teams can use shared, physics-grounded insight to make faster, better-informed design decisions, while also providing greater manufacturing flexibility — especially at the backend.” It used to be “to each his own” Foundries and OSATs have taken on complementary duties for many years. Foundries fabricate the silicon chip, while OSATs put the chip into a housing and test the final product. A vast array of EDA tools and fab equipment makes what the foundry does possible, while OSATs have worked more with tools that originated in the printed circuit board (PCB) world. Two industry trends are challenging this status quo. The first is the development of advanced packaging. It’s no longer enough to put a chip on a substrate, wire it up, and pour molding compound over it. This doesn’t minimize the effort required to do those basics well, but they’re very different from what advanced packaging requires. “Advanced packaging is becoming more lithography-intensive,” said Khodabandeh. “The industry’s push toward higher interconnect density for AI, HBM, chiplet architectures, and heterogeneous integration is driving the adoption of wafer-fab-style patterning processes within packaging facilities. RDL fabrication is a good example, where increasingly sophisticated lithography is required to create finer features.” Intel Foundry works both sides of the aisle, with foundry and packaging capabilities. “When you do fine pitch bumps, the bump count goes up quite a bit compared to coarse pitch,” said Ravi Mahajan, fellow at Intel Foundry. “So you have to figure out things like embedding [bridge dies such as EMIB]. You have to figure out alignment and equipment precision.” For them, they can attempt these things on either side of the divide. Foundries have been heavily involved in 2.5D packaging, but a second industry trend is making that more difficult — a lack of capacity. Foundries can’t make all the chips their clients want, so they’re prioritizing and allocating. That may mean turning away some business they would otherwise entertain, likely in backend and legacy processes, since foundries will focus on newer-node silicon processes they are uniquely capable of. The OSATs