The global semiconductor automated test equipment (ATE) market is witnessing a decline due to the global economic downturn and volatility in demand from the semiconductor market. Trade tensions in major semiconductor hubs – China, South Korea, Japan and the United States – are deterring semiconductor manufacturers and vendors from making any major capital investments. Further, with the slowdown in investment from the data processor and smartphone segments, the ATE market is currently faced with an overall slackening of demand from key end users and geographies. However, testing of semiconductor chips and ICs as a requisite for ensuring optimum performance, functionality and adherence to stringent regulations remains a key market driver, especially with the ubiquity of semiconductors in the telecommunication, consumer and automotive verticals.

Semiconductor vendors are looking to ease the price pressure on testing solutions, which has been more pronounced in the memory segment as a result of high volumes of memory-based semiconductors in the market. In addition, key vendors are heavily focused on meeting the testing needs for next-generation technologies such as 5G and Artificial Intelligence (AI). Both 5G and AI are expected to provide new revenue streams and generate demand for high-end memory and non-memory testers, driving the growth for HBM, 3D NAND, graphic DRAMs, SoC testers etc. Among key end users, the automotive segment provides the highest growth potential for ATE vendors due to the integration of semiconductor electronics and the future assimilation of AI capabilities. These will drive testing requirements throughout the vehicle lifecycle for ensuring optimum performance and conformity with stringent safety standards, which are critical for functionalities such as Advanced Driver Assistance Systems (ADAS) in the automotive segment.

Geographically, China and Taiwan remain the strongest market for ATE vendors due to the high market demand and the presence of many Integrated Device Manufacturers (IDMs) and Outsourced Semiconductor Assembly and Test companies (OSAT) in the region. The overall market for testing is currently dominated by 3 to 4 major market participants that include Teradyne Inc., Advantest and Cohu Inc. All top participants have a strong customer base and geographic presence, although the market for discrete ATE continues to remain more fragmented due to the varying needs of testing. In the long term, open and modular test solutions such as PXI will gain higher traction for meeting the gaps in testing needs for flexible and cost-efficient testing. Vendors will need to focus on addressing the need for high-volume, multi-site and high-parallelism testing needs while simultaneously lower the overall testing cost for end users to achieve strong growth. In the next 2 to 3 years, market solutions will increasingly make use of cloud computing and edge computing to shorten the time to test and allow flexibility in testing.