As Gordon Moore’s law hits technical limits. Lego inspires the new breed of Semiconductors

Gordon Moore, co-founder of Intel, predicted in 1965 that the number of transistors in an integrated circuit (IC) would double about every two years. Since then, “Moore’s Law”has stood the test of time.

Technological advances have made the production of 3-nanometer chips possible ( 1 nanometer is a billionth of a meter), and by 2025, Silicon Fab’s shall be producing 2-nanometer chips. However, once the industry hits 1-1.5 Nanometer chips, the fundamental laws of Physics shall come into conflict ( A silicon atom is about 0.2 Nanometers), resulting in manufacturing issues and defects. The costs of production shall also skyrocket. 

On the other hand, there is industry pressure to pack more transistors onto chips, reduce size, and increase performance, especially in advanced domains like AI. The industry is concerned that with Moore’s law now ending, chip “architectures” and fundamentals processors  design and packaging have to be rethought.  

In a recent survey by Deloitte in the semiconductor industry, 11% of participants were concerned about Moore’s law coming to an end, 33% wanted specialized IOT Chips, 19 % wanted Open Source hardware design, and 17% were eager to embrace 2D/3D IC Configurations possible in chiplets.

So, on the one hand, there are OEMs like smartphone manufacturers who buy billions of advanced chips. A typical mobile phone will have a powerful processor comprising memory, data processing and graphic CPU, telecommunications, and power control. However, small and medium companies making specialized equipment have to buy chips available from large semiconductor companies, which are not optimal for their use.

One idea is not to print every component on the same chip but to create what’s known as a “System on a Chip”. Companies are now talking of “chiplets” comprising smaller “building blocks” to be mixed and matched much like Lego Blocks creating new flexibility in design and production. Intel, TSMC, Samsung, Arm, Qualcomm, and others have come together to establish standards for building these chips. Mediatek and Nvidia recently announced a collaboration on chiplets.

No longer is it necessary to make “monolithic” chips. Companies can combine a variety of sub-components based on needs and price points. One challenge is the increase in the chip size and power needed. Small modular chiplets can be put together like Lego Blocks; though expertise is needed in advanced packaging configurations. Individual components can be arranged flat, around each other, or vertically in 2D/3D configurations. The chip industry has embraced this idea and adopted an open-source standard called Universal Chiplet Interconnect Express to address the issue of communication between chiplet components.

Chiplets are extremely cost-effective; they can reuse existing Systems on Chips (SOCs), decreasing R&D costs and accelerating time to market. The end products are faster and more reliable since chiplets are designed to optimize for specific tasks.

Scalability and Customization are the hallmarks of chiplets. In today’s world, chip designers and manufacturers have to offer a vast range of chips for specific industries. This increases design and production costs. The fact that chiplets can be easily configured and manufactured shall reduce the cost of ownership.

Chiplets can be designed for energy efficiency, which is a big concern in the industry, and also future-proofed by redesigning key components to fit into existing architectures for future needs.

In September 2023, Intel demonstrated a number of new chip designs based not on a single piece of silicon but a move to chips that combine several components, or “chiplets,” into a single semiconductor. They unveiled “Pike Creek,” a UCIE-enabled chiplet, which communicated with a chipset designed by Synopsys and manufactured by TSMC. 

This involves Intel assembling a chip from a series of components rather than fashioning it from a single piece of silicon. The chiplet concept gives Intel an edge. 

As per Cadence Design Systems Inc., Chief Executive Officer Anirudh Devgan ( Cadence is a World leader in Semiconductor Design and software), as computing demands grow and advanced chips become more expensive. As transistors get smaller, assembling silicon into three-dimensional structures and working around physical limitations are becoming essential.

“Manufacturing is critical, three nanometers, two nanometers, but you must invest where the puck is going. The puck is going to 3D-IC”.

Silicon designers advance their capabilities by stacking chiplets into a multifunctional 3D chip. This approach is being used as the constant pursuit of ever-smaller transistors approaches the limits of physics. Using chip stacking, designers are creating powerful chips to handle workloads such as generative AI, which can do so at a reasonable cost.

Rising Cost of Chip Design

The semiconductor industry faces a significant challenge in rising costs of monolithic chip design. With hundreds of billions of transistors on a medium-end chip and over a trillion chips on the Cerebras platform, designers are spending from US$ 175-200 Million on a 10 Nanometer chip, US$ 300 Million on a 7 Nanometer chip, and over US$ 540 Million on a 5 Nanometer chip. It is reported that Qualcomm has spent over US$ 1 billion on the design of Snapdragon X Elite designed to run Microsoft Windows 12. It shall compete head-on with Intel PC chips and Apple’s M2 Max for the laptop market. In addition, it promises to have special AI features. The product will debut in mid-2024. These are big bets with no guarantee of success. 

On the other hand, chiplets can be assembled for various configurations and requirements. They can use existing designs that chip companies have developed over many years. Various companies can share and collaborate using their IPR to customize solutions for different requirements. Chiplets shall help reduce design and manufacturing costs.

US Government Initiatives

The US government is advancing microelectronics research, the success of chiplets will depend on how they are packaged. The CHIPS Act of 2022, which amounts to $52.7 billion, will direct $11 billion towards advanced semiconductor research to support the US chip industry. The act also establishes a National Advanced Packaging Manufacturing Program to foster collaboration between academia and industry.

poDemand and Market Projections

As per the Semiconductor Industry Association, industry revenues were US$ 527 Billion in 2023. As per McKinsey, the industry will grow to US$ 1 trillion by 2030. 

Chiplets are a new vertical in the semiconductor industry, so projections could be more precise. As per a report by Insight Ace Analytics, revenues in 2023 were around US$ 3.1 billion, projected to grow to US$ 107 billion in 2033. 

Key drivers for this market are China, India and APAC. With the increase in demand for automobiles, EVs, entertainment, wearables, communication, healthcare, tablets, and e-commerce devices, the chiplet market can be a cost-effective way to serve diverse market needs at lower price points. Drivers for growth in the Western world other than the traditional markets shall be food and beverage, personal care, and packaging.

Over the last few weeks, the chip industry, fuelled by the skyrocketing AI segment, has drastically changed growth projections. If AI fuels this considerable demand, chiplet sales will increase.

China and Chiplets: The Dragon poised to strike back

Chiplets can help China develop more powerful chips despite US government sanctions. Chinese companies can’t purchase the most advanced chips or the equipment to make them, so they must figure out how to maximize their technologies. 

Chinese companies can make each chiplet to the most advanced level they are capable of and assemble these chiplets into a system; it can act as a substitute for more powerful cutting-edge chips. 

Huawei, the Chinese tech giant with a chip-design subsidiary, HiSilicon, experimented with its first chiplet design product in 2014. In 2022, Huawei’s then chairman, Guo Ping, said the company hoped to connect and stack up less advanced chip modules to keep the products competitive. 

Currently, there’s much money going into the chiplet space. Mainly, one Chinese city, Wuxi, has gone all-in on chiplets. By 2022, Wuxi had over 600 chip companies. In 2023, Wuxi announced its plan to become the “Chiplet Valley.” 

Today, Chinese companies are responsible for 38% of the chip packaging worldwide. Companies in Taiwan and Singapore still control the more advanced technologies, but it’s easier to catch up on this front.

At the same time, a slew of Chinese startups are receiving venture backing. Polar Bear Tech, a Chinese startup developing universal and specialized chiplets, received over $14 million in investment. It released its first chiplet-based AI chip, the “Qiming 930,” in February 2023. Several other startups, like Chiplego, Calculate, and Kiwimoore, have also received millions to make specialized chiplets for cars or multimodal artificial intelligence models.

India and Chiplets

India needs to catch up in the semiconductor industry. Chiplets is a low-cost opportunity for Indian companies to tie up with international chip companies, acquire designs of various chiplet components, and offer customized solutions.