SHINDEV View: Semiconductor Test Equipment Enters a High-Cycle Uptrend — Back-End Packaging Becomes a Key Battleground for Localization

(External Research Release | SHINDEV Research Team)

With global wafer-fab expansion, continuous chip technology iteration, and accelerating adoption of advanced packaging, the semiconductor value chain is placing materially higher requirements on quality control and reliable delivery. SHINDEV’s research team believes that test equipment—core infrastructure in the back-end packaging stage—is entering an upcycle driven by the resonance of demand expansion and localization substitution. Supported by rising domestic manufacturing capex, rapid growth in end-market applications, and favorable industrial policies, China’s semiconductor test equipment market shows a clear and highly visible growth trajectory.

1) Industry Role: Test Equipment Is the “Quality Gate” of Back-End Packaging

From the manufacturing flow perspective, semiconductor equipment can be broadly categorized into wafer-fab equipment, inspection/metrology equipment, packaging equipment, and others. Within inspection/measurement, semiconductor inspection equipment is typically divided into:

Metrology & inspection equipment (front-end): primarily “physical” measurements and defect inspection to monitor process parameters and yield-impacting defects;

Test equipment (back-end): used for wafer sort (CP) and final test (FT), focusing on “electrical performance verification” to confirm that chip functions and electrical specifications meet shipment requirements.

SHINDEV notes that test equipment spans the most critical checkpoints from wafer manufacturing to assembly and shipment:

In CP (wafer sort), the prober and tester work together to screen bare dies on the wafer for electrical parameters and functional compliance;

In FT (final test), the handler/sorter and tester validate packaged devices for final consistency before shipment.

Because every shipped chip must be 100% tested, test equipment naturally features high rigidity and strong demand visibility.

2) Market Momentum: China’s Test Equipment Market Is Scaling Rapidly with Clear Visibility

Based on publicly available data compiled by SHINDEV:

China semiconductor inspection equipment market grew from RMB 7.61bn in 2016 to RMB 38.56bn in 2022 (CAGR ~31.1%), and is expected to reach RMB 67.32bn by 2027.

China semiconductor test equipment market grew from RMB 4.55bn in 2016 to RMB 18.19bn in 2022 (CAGR 26.0%), and is expected to reach RMB 26.74bn by 2027.

Structurally, testers represent the largest share of the test equipment segment: globally, testers accounted for about 61.9% of the market in 2022; in China, the share was approximately 62.4%. SHINDEV believes that with continued growth in automotive electronics and other downstream applications, testers will remain the most critical and elastic driver of incremental demand.

3) Product Landscape: Highly Systemized and Customized—Clear Tiering in Technical Difficulty

Back-end test equipment typically includes:

Tester (ATE / test system): the most technically demanding and highest-barrier core equipment;

Handler / sorter: automated device transport, marking, binning, and packing based on test results;

Prober: high-precision wafer positioning and electrical contact interface for CP testing.

Testers can be further segmented by DUT (device under test):

SoC testers (CPU/GPU/ASIC/MCU/display drivers, etc.)

RF testers (transmit power, receiver sensitivity, spectral characteristics for wireless chips)

Memory testers (DRAM/NAND/SSD, read/write speed, capacity, endurance)

Analog / mixed-signal testers (PMIC, amplifiers, AD/DA, etc.)

Discrete device testers (MOSFET, IGBT, diodes, transistors, etc.)

Overall, SHINDEV observes a clear hierarchy in engineering complexity:

memory testers are generally the most challenging; RF and SoC follow; analog testers are relatively more approachable for domestic breakthroughs.

As chips continue to evolve, performance requirements—such as channel count, test frequency, multi-site parallelism, vector depth, and data acquisition/analytics—are rising, forcing continuous platform iteration and product-line expansion.

4) Core Moat: Deep Binding to Chip Design—Ecosystem Collaboration Defines Barriers

SHINDEV emphasizes that competitive advantage is determined not only by hardware specifications, but also by system delivery capability and ecosystem collaboration.

Test systems must be tailored to the DUT type and test items, with customized functions and performance targets to ensure product quality and reliability. Although direct customers are typically foundries and OSATs, the ultimate decision influence often lies with fabless design houses. Early engagement during the design stage—co-defining test plans, programs, and key parameters—creates long-term collaboration and deep binding.

This “design-side binding effect” propagates to foundry and OSAT equipment selection, forming a closed loop across design → manufacturing → assembly/test, and materially increasing customer stickiness and switching costs.

5) Growth Drivers: Capex + Process Iteration + End-Market Expansion

SHINDEV believes market growth is jointly driven by multiple forces:

Near-term: rising domestic manufacturing capex

Foundry expansions and OSAT capacity build-outs directly lift demand for testers, probers, and handlers.

Long-term: process evolution and advanced packaging

Global fab expansion continues to release incremental demand;

Shrinking nodes and increasing process complexity raise test frequency;

Chiplet and advanced packaging significantly increase die-level testing and system-level packaging validation requirements.

End-market expansion: 5G, cloud, AI, IoT, EVs

Broader applications mean higher shipment volumes and stricter reliability requirements, increasing test value per device.

Policy tailwinds: accelerating R&D and qualification for domestic tools

Industrial policies focused on supply-chain resilience support faster development and verification of local test equipment.

6) Competitive Dynamics: Global Giants Dominate—Localization Window Is Open

The global semiconductor test equipment market is still dominated by international leaders, especially in testers where entry barriers are high and customer qualification cycles are long. However, SHINDEV believes that the combined forces of policy support, downstream capacity expansion, and supply-chain security requirements are accelerating localization.

In China, overseas suppliers continue to hold a large share of tester revenues. Domestic players have progressed faster in certain analog / mixed-signal areas, while high-end SoC and memory remain key opportunities for further penetration. Meanwhile, the rise of local fabless champions and increasing spend in advanced packaging are expanding the qualification window for domestic suppliers.

7) Conclusion: Sustained Upcycle—Domestic Players May Break Through via Targeted Segments

In summary, semiconductor test equipment—critical infrastructure for back-end packaging—features high rigidity, systemization, customization, and deep customer binding. With concurrent drivers from expansion capex, process iteration, and end-market growth, the sector is likely to remain in a medium-to-long-term upcycle.

SHINDEV believes domestic suppliers should seize the local window through cost-performance and service responsiveness, building early wins in analog/mixed-signal, discrete devices, selected SoC and RF niches, while strengthening platform scalability and test data analytics. Over time, this can support an upgrade toward higher-complexity test systems—helping customers reduce cost, improve yield, shorten delivery cycles, and advancing supply-chain resilience.