what is an osat
An OSAT — short for Outsourced Semiconductor Assembly and Test — is a company that specializes in packaging finished silicon dies and testing completed chips, handling the back-end steps of chip manufacturing on behalf of foundries and chip designers who would rather not build and run that specialized capacity themselves.
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{ "type": "nodes", "items": [
{ "title": "Foundry finishes fabricating wafers", "sub": "bare, untested dies still on the wafer", "tone": "blue" }
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{ "type": "group", "title": "OSAT handles the back end", "items": [
{ "title": "Dicing and packaging", "sub": "cutting the wafer, encasing each die", "tone": "green" },
{ "title": "Final testing", "sub": "verifying each finished chip works correctly", "tone": "green" }
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{ "title": "Finished, tested chips ready to ship", "sub": "delivered to the fabless company or foundry's customer", "tone": "orange" }
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```
**An OSAT exists because packaging and testing are specialized enough jobs that many foundries and chip companies prefer to outsource them entirely.** Front-end fabrication — actually manufacturing the transistors on a wafer — and back-end assembly and test require very different equipment, facilities, and expertise; rather than every foundry or fabless company building out its own packaging and testing lines, OSAT companies specialize purely in that back-end stage, serving many different chip customers at once.
```svg
```
| Stage | Who typically does it | What happens |
|---|---|---|
| Front-end fabrication | Foundry or IDM | Building transistors and circuits on the wafer |
| Dicing | OSAT | Cutting the finished wafer into individual dies |
| Packaging | OSAT | Encasing each die in a protective, connectable housing |
| Final test | OSAT | Verifying each finished chip functions correctly before shipment |
**Final testing at an OSAT is the last checkpoint before a chip reaches a customer, catching defects that earlier testing stages might miss.** Even after a die passes initial testing on the wafer, packaging itself can introduce new failure points, so OSATs run a final round of electrical and functional tests on the fully assembled chip — this final test step is what actually determines whether a specific finished chip is good enough to ship, separate from the wafer-level testing that happens earlier in the process.
**The OSAT industry is geographically concentrated, which has made it a subject of growing supply-chain attention alongside front-end fabrication.** A relatively small number of large OSAT companies handle a significant share of the world's chip packaging and testing volume, meaning that just as foundry capacity is often discussed as a chokepoint, back-end assembly and test capacity is increasingly recognized as its own important link in the overall chip supply chain, worth watching just as closely as fabrication itself.
**As chip packaging has grown more advanced, some OSATs have taken on responsibilities that go well beyond simple assembly.** Rather than just placing a die in a basic housing, leading OSATs now perform sophisticated advanced packaging work — stacking multiple dies, connecting chiplets together — meaning some OSAT companies now compete directly with foundries themselves in offering high-value advanced packaging services, not just traditional back-end assembly.
Read the OSAT through a specialization lens: just as fabless companies let chip designers focus purely on design, OSATs let foundries and chip companies focus purely on fabrication, trusting a dedicated back-end specialist to handle the equally demanding, equally specialized work of packaging and testing every finished chip.