Will 2025 Be the Year of the Chiplet?

As we approach 2025, the semiconductor industry is at the initial stage of a monumental shift toward chiplet technology. While 2025 won't be the year chiplets come to dominate the market, it will mark the beginning of a decade-long transition that will see chiplets change the face of electronics design and manufacturing. 

This evolution builds upon the trends we discussed earlier this year in Why Future Electronics Designs Might Be Chiplet-Based. The modular capabilities of chiplets offer many advantages, encompassing improved performance, economics, and flexibility. These advantages are becoming increasingly important as the electronics industry confronts the limitations of traditional monolithic chip designs.

The Chiplet Rocketship is on the Launch Pad

And the final countdown has begun. The chiplet market is poised to experience explosive growth, driven by increasing demand for high-performance computing across industries. Applications for AI, data centers, automotive, and consumer electronics will lead the charge. Estimates from Market.us Scoop project the chiplet market will grow from US $3 billion in 2023 to reach US $107 billion by 2033, growing at a Compound Annual Growth Rate (CAGR) of 42% (see Figure 1). 

The data graphed above is actually quite conservative compared to other forecasters. For example, according to KBV Research, the global chiplet market is expected to reach $373 billion by 2030, with a 76% CAGR. Markets and Markets project the market will grow to $148 billion as soon as 2028, with an astounding CAGR of 87%, more than double what’s shown in Figure 1.

2025: A Big Year for Chiplet Adoption

2025 will likely mark a tipping point where chiplet technology transitions from a promising concept to a practical reality in a number of industries. The convergence of several key factors is set to accelerate chiplet adoption, creating a perfect storm of innovation and opportunity.

Maturing Standards: The Universal Chiplet Interconnect Express (UCIe) standard, established by Intel and other industry leaders, is expected to gain wider adoption in 2025. This standard will facilitate interoperability and accelerate chiplet integration across manufacturers.

Growing Investment: Major semiconductor companies are allocating significant resources to chiplet research and development, with some making multi-billion dollar investments. Government initiatives in numerous countries are also funding chiplet projects, recognizing their strategic importance.

Advancing Packaging Technologies: Companies like TSMC and Intel are making significant strides in advanced packaging technologies for chiplets. These innovations will enable more efficient integration of chiplets into complex and multi-vendor systems.

Expanding Ecosystem: The chiplet ecosystem is growing rapidly, with EDA companies, foundries, and Outsourced Semiconductor Assembly and Test (OSAT) companies all doing their part to advance chiplet technology.

The Long and Winding Road to Chiplet Ubiquity

While 2025 marks a significant milestone, the takeover of chiplets will gradually unfold over the following decade. Several factors will drive this long-term transition:

Initially, we'll see homogeneous designs with IP blocks (intellectual property blocks, which are reusable units of logic or chip layout design) from the same vendor. As the technology matures, truly heterogeneous designs will emerge. 

These heterogeneous designs will combine components from multiple vendors and potentially different manufacturing processes – for example, mixing high-performance logic chiplets with memory chiplets or analog/RF chiplets, each optimized for its specific function. However, this level of integration is still years away, likely to become prevalent in the 2030s.

As chiplet production scales up, the industry must overcome unique challenges, particularly regarding testing and quality assurance. The higher volume of individual dies will require increased testing workloads and new approaches to ensure functionality before final packaging.

China is embracing chiplet technology, partly driven by US trade sanctions on advanced chips and chip manufacturing equipment. According to MIT Technology Review, by connecting several less-advanced chips into one, Chinese companies could use chiplets to circumvent sanctions imposed by the US government.

Impact of Chiplets on Various Sectors

As the modular approach to semiconductor design gains traction, the ripple effects will be felt far beyond chip fabrication plants. Notably, chiplets are set to become the building blocks of innovation across a range of sectors, including:

Automotive: The shift towards electric vehicles (EVs) and advanced driver-assistance systems (ADAS) is creating demand for more powerful and flexible processing solutions. Chiplets offer the power and adaptability to meet these requirements and will become the status quo for many automotive applications in the decade ahead.

According to a McKinsey survey, 48% of industry execs expect chiplets for automotive applications to emerge between 2027 and 2030, while 38% predict adoption between 2030 and 2035. This gradual rollout reflects the cautious approach of the automotive industry and the time required for chiplet technologies to mature.

Artificial Intelligence and Data Centers: Chiplets will enable the creation of more powerful and energy-efficient AI processors by allowing the integration of specialized cores for different AI tasks, such as inference and training, on a single package. Driven by today’s insatiable appetite for AI processing power, companies like NVIDIA are investing significantly in chiplets.

Consumer Electronics: Chiplets are enabling performance improvements in consumer devices. For example, AMD's Ryzen 7 5800X3D desktop CPU demonstrates a 15% boost in gaming performance. Beyond gaming, chiplets are expected to revolutionize smartphones, tablets, and wearables by enabling manufacturers to combine best-in-class components for specific functions like AI processing, graphics, and power management.

Edge Computing: Specific use cases in edge computing, such as industrial IoT and smart city applications, will benefit greatly from the flexibility and performance offered by chiplet-based designs. In industrial edge computing applications, this will translate into more responsive and autonomous systems. 

Challenges and Considerations

Even with the promising outlook, the chiplet revolution faces several challenges:

Standardization: While progress has been made with chiplet standards like UCIe, additional work is needed to enable problem-free integration across different chiplet manufacturers and technologies.

Testing and Quality Assurance: The modular nature of chiplets introduces new complexities in testing and overall system reliability, placing a strain on traditional testing and QA methodologies.

Talent and Resource Shortages: The shift to chiplet technology requires a skilled workforce and access to critical resources. As chiplet demand grows, we may see shortages of both.

Looking Ahead to a Modular Future

While 2025 won't be the year chiplets take over, it will mark the beginning of a transformative decade for the semiconductor industry. As we move into the 2030s, chiplets will become a dominant approach to chip design, offering new levels of flexibility, performance, and cost-effectiveness. A successful transition will depend on dedicated collaboration across the chiplet ecosystem. Advanced packaging technologies and new approaches to standardization and testing will also be needed. 

As the chiplet ecosystem matures, we can count on seeing innovative applications and solutions that push the boundaries of electronics manufacturing. As we look ahead, it's clear that the chiplet revolution will bring about entirely new possibilities for the future of semiconductor technology.