Chiplets Are Redrawing the Data Center Playbook

AMD and Intel turn to chiplets and advanced packaging to scale data center performance, trading simplicity for flexibility and speed

6 Feb 2026

A shift is under way in the design of data centre processors as chipmakers move away from ever larger, monolithic chips towards modular architectures built from smaller components, known as chiplets. The change is being driven by the rapid growth of cloud computing and artificial intelligence, which is exposing the physical and economic limits of traditional processor design.

For decades, performance gains came from packing more transistors onto a single piece of silicon. As chips grew larger, however, manufacturing became more difficult. Defect rates rose, production yields fell and costs increased sharply. By the late 2010s, these pressures were becoming particularly acute for hyperscale data centre operators expanding capacity at speed.

Chiplets offer an alternative. Rather than producing one large processor, manufacturers break designs into smaller functional blocks that are later assembled into a single package. This improves manufacturing efficiency and allows greater flexibility in how processors are configured.

AMD was among the first to demonstrate that the approach could work at scale. Beginning with its EPYC Rome server processors in 2019, and followed by Milan and Genoa, the company used chiplets to increase core counts and memory bandwidth while keeping costs under control. For data centre customers, this translated into faster performance improvements delivered on shorter timelines.

Intel has taken a different route, focusing on advanced packaging technologies. Its EMIB and Foveros platforms allow chiplets to be placed closer together or stacked vertically, making it possible to combine compute, graphics and input output components built using different manufacturing processes within a single processor.

The approach is not without drawbacks. Chiplet based designs can introduce latency between components and make power delivery and heat management more complex. Advanced packaging also adds cost and requires precise execution.

Despite these challenges, momentum is shifting towards modular design. Chiplets allow manufacturers to reduce production risk, reuse designs and respond more quickly to changing demand. For data centre operators, this promises faster upgrades and systems better matched to modern workloads.

The direction of travel is increasingly clear. Future gains in data centre processors are likely to depend less on the size of individual chips and more on how effectively smaller pieces are combined.