For more than 50 years, computer chip designers have basically used one tactic to improve performance: they’ve downsized electronic components to put more power into each piece of silicon.

Then, more than a decade ago, engineers at chipmaker Advanced Micro Devices began experimenting with a radical idea. Instead of designing one big microprocessor with a huge number of tiny transistors, they decided to create one of the smaller chips that would be densely packed together to work as one electronic brain.

The concept, sometimes referred to as chiplets, became widespread when AMD, Apple, Amazon, Tesla, IBM, and Intel introduced such products. Chiplets quickly gained popularity because smaller chips are cheaper to manufacture and their stacks can outperform any single piece of silicon.

This strategy, based on advanced packaging technologies, has since become an important tool in driving progress in the field of semiconductors. And it represents one of the biggest shifts in recent years for an industry that is driving innovation in areas like artificial intelligence, self-driving cars and military hardware.

“The packaging is where the action will unfold,” said Subramanian Ayer, professor of electrical and computer engineering at UCLA, one of the pioneers of the chiplet concept. “This is because there really is no other way.”

The catch is that such packaging, as well as the production of chips itself, is overwhelmingly dominated by Asian companies. While the United States accounts for about 12 percent of the world’s semiconductor production, US companies make only 3 percent of chip packages, according to the IPC trade association.

This problem has now placed chiplets at the center of US industrial policy. The Chip Act, a $52 billion subsidy package passed last summer, was seen as President Biden’s move to revitalize domestic chip manufacturing by providing money to build more sophisticated plants called “factories.” But part of that was also to keep the United States’ cutting-edge packaging plants up and running to cover more of this important process.

“As chips get smaller, how you package them becomes more and more important, and we need it to be made in America,” Commerce Secretary Gina Raimondo said in a speech at Georgetown University in February. .

The Department of Commerce is currently accepting applications for manufacturing subsidies under the Chip Act, including for chip packaging plants. It also funds a research program on improved packaging.

Some chip packaging companies are quickly looking for funding. One of them is Integra Technologies in Wichita, Kansas, which has announced its $1.8 billion expansion plans but said it is contingent on getting federal subsidies. Amkor Technology, an Arizona-based packaging service that does most of its operations in Asia, also said it was in talks with customers and government officials about a manufacturing presence in the US.

Packing chips together is not a new concept, and chiplets are simply the latest iteration of this idea, using technological advances that help squeeze chips closer together — either side by side or on top of each other — along with faster electrical connections between them. .

“What is unique about chiplets is how they are electrically connected,” said Richard Otte, chief executive of Promex Industries, a chip packaging service in Santa Clara, Calif.

Chips can’t do anything without the ability to connect them to other components, which means they have to be placed in some kind of package that can carry electrical signals. This process begins after factories complete the initial phase of production, which can create hundreds of chips on a silicon wafer. Once this wafer is cut into pieces, the individual chips are usually attached to a key base layer called a substrate that can conduct electrical signals.

This combination is then covered with a protective plastic, forming a housing that can be inserted into the circuit board needed to connect to other system components.

Initially, these processes required a lot of manual labor, prompting Silicon Valley companies to relocate packaging to lower-wage Asian countries more than 50 years ago. Most chips are usually delivered to packaging services in countries such as Taiwan, Malaysia, South Korea and China.

Since then, advances in packaging have gained importance due to diminishing returns from Moore’s Law, a shorthand for chip miniaturization that has driven progress in Silicon Valley for decades. It is named after Gordon Moore, the co-founder of Intel, whose 1965 paper described how quickly companies doubled the number of transistors in a typical chip, which increased performance at a lower cost.

But these days, smaller transistors aren’t necessarily cheaper, in part because it can cost between $10 billion and $20 billion to build factories to make advanced chips. Large and complex chips are also expensive to design and tend to have more manufacturing defects, even as companies in fields such as generative AI require more transistors than the largest machines can currently accommodate. chip production.

“The natural response to that is to put more things in one package,” said Anirudh Devgan, chief executive of Cadence Design Systems, whose software is used to design both conventional chips and chiplet-style products.

Synopsys, a competitor, said it is tracking more than 140 customer projects based on the combination of multiple chips. By 2027, up to 80% of microprocessors will use chiplet-style designs, according to research firm Yole Group.

Companies today typically design all chiplets in a single package, along with their own proprietary connectivity technology. But industry groups are working on technical standards to make it easier for companies to assemble products from chips from different manufacturers.

The new technology is mainly used now for extreme performance. Intel recently unveiled a 47-chip Ponte Vecchio processor that will be used in a powerful supercomputer at Argonne National Laboratory near Chicago.

In January, AMD unveiled plans for the MI300, an unusual product that combines standard computing chiplets with computer graphics chipsets, as well as a large memory chipset. Designed to power another cutting-edge supercomputer at Lawrence Livermore National Laboratory, this processor has 146 billion transistors, compared to tens of billions in the most advanced conventional chips.

Sam Naffziger, senior vice president of AMD, said it was not a gamble for the company to bet on chiplets in its server PC business. The complexity of the packaging was a major hurdle, he said, which was eventually overcome with the help of an unknown partner.

But the chiplets paid off for AMD. The company has sold more than 12 million chips based on the idea since 2017, according to Mercury Research, and has become a major player in microprocessors that power the Internet.

Packaging services still need other suppliers of substrates that chiplets need to connect to PCBs and to each other. One company leading the chiplet boom is Taiwan Semiconductor Manufacturing Company, which already makes chips for AMD and hundreds of other companies and offers an advanced silicon-based substrate called an interposer.

Intel is developing a similar technology and also improving on less expensive conventional plastic substrates in an approach favored by some, like Silicon Valley startup Eliyan. Intel is also developing new packaging prototypes as part of the Pentagon program and is hoping to secure support from the Chip Act for a new packaging pilot plant.

But there are no major manufacturers of these substrates in the United States, which are mainly made in Asia and are derived from the technologies used in the manufacture of printed circuit boards. Many US companies have also left the business, further troubling industry groups that industry groups hope will spur federal funding to help board suppliers start making wafers.

In March, Mr. Biden issued a determination that the nation’s state-of-the-art case and circuit board manufacturing is essential to national security and announced $50 million under the Defense Production Act for US and Canadian companies in these areas.

Even with these subsidies, assembling all the elements needed to reduce US dependence on Asian companies “is a huge challenge,” said Andreas Olofsson, who led DoD research in this area before founding a packaging startup called Zero ASIC. “You don’t have suppliers. You don’t have a workforce. You don’t have equipment. You have to start from scratch.”

Ana Swanson made a report.