Ten years ago AMD introduced the concept of smaller, interconnected chips that together work like one digital brain. Sometimes called “chiplets,” they’re generally less expensive than building one large chip, and when grouped together into bundles have often outperformed single wafters. In addition to AMD, companies including Apple, Amazon, Intel, IBM and Tesla have embraced the chiplet formula, which leverages advanced packaging technology, an integral part of building advanced semiconductors. Now experts are predicting packaging is going to be even more of a focus in coming years, as the global chip wars heat up.

“Packaging is where the action is going to be,” said IBM fellow Subramanian Iyer, a professor of electrical and computer engineering at UCLA, who helped pioneer chiplets (as reported by The New York Times). “It’s happening because there is actually no other way.”

Packaging “represents one of the biggest shifts in years for an industry that drives innovations in fields like artificial intelligence, self-driving cars and military hardware,” notes NYT.

The problem is that packaging, “like making chips themselves, is overwhelmingly dominated by companies in Asia.” The U.S., which accounts for roughly 12 percent of global semiconductor production, is trying to ramp up domestic production and become energy independent.

As a result, chiplets are now in the spotlight when it comes to U.S. industrial policymaking. The $52 billion CHIPS and Science Act, which became law in August 2022, is providing funds to create semiconductor fabrication plants here.

“As chips get smaller, the way you arrange the chips, which is packaging, is more and more important and we need it done in America,” Commerce Secretary Gina Raimondo said in February.

Examples of this advanced packaging include Intel’s new Ponte Vecchio processor, which packs 47 chiplets, for use in new supercomputer at Argonne National Laboratory in Illinois. And AMD is making the MI300, which “combines chiplets for standard calculations with others designed for computer graphics, along with a large pool of memory chips,” per NYT.

That processor, which has 146 billion transistors (versus a mere tens of billions for conventional super chips) is earmarked for the supercomputer at Lawrence Livermore National Laboratory in California.

The U.S. isn’t the only market striving for chip independence. So is China, whose task has been made more challenging thanks to crippling U.S. tech sanctions. Its strategy is now to “de-Americanize” as it remakes its chip business, The New York Times reports.

Meanwhile, Taiwan — whose foundries are estimated to produce about 92 percent of the world’s advanced chips at present — has its own problems; The New York Times reports it is “running low on a strategic asset: engineers.”