How Interconnects Turned Into the New AI Chokepoint

Tenstorrent’s July 2025 deal for Blue Cheetah highlights how interconnect control is emerging as a key lever in AI chip design

6 Jan 2026

A subtle but consequential shift is underway inside the semiconductors that power artificial intelligence. As chip designers move away from single, monolithic processors toward modular chiplet-based systems, the technology that connects those components is becoming a focal point of competition across the industry.

That dynamic came into sharper view on July 1, 2025, when Tenstorrent said it would acquire Blue Cheetah Analog Design. The transaction underscores how interconnects, once a supporting feature, are increasingly central to performance, power efficiency and long-term differentiation in AI hardware, according to analysts who track advanced packaging.

Tenstorrent has built its product strategy around modular architectures. Rather than relying on ever-larger chips that strain manufacturing limits, the company assembles multiple smaller dies into a single package. The approach is widely seen as a way to improve yields, shorten development cycles and tailor processors to specific AI workloads, benefits that depend heavily on fast and energy-efficient communication between chiplets.

Blue Cheetah operates at that critical layer. The company develops high-speed, low-power interconnect technology designed for advanced packaging environments. By bringing that capability in house, Tenstorrent gains tighter control over system-level trade-offs and reduces reliance on external suppliers, company statements suggest, at a time when demand for AI accelerators continues to rise.

The acquisition also reflects a broader industry recalibration. As AI models grow larger, interconnects account for a rising share of overall power consumption and influence total system costs. Open standards such as UCIe and Bunch of Wires are intended to foster interoperability across chiplet ecosystems, but ownership of the underlying implementations can still yield performance and efficiency gains beyond the standard baseline.

Other companies are pursuing similar strategies. Qualcomm and several chip designers aligned with hyperscale data center operators have made chiplet-focused acquisitions or internal investments, signaling a push to secure critical building blocks rather than depend solely on partners. Control over interconnects increasingly confers influence over future standards and product road maps.

Tenstorrent’s executives have argued that open standards alone do not guarantee differentiation, emphasizing internal expertise as the deciding factor. As consolidation accelerates around key technologies, the outcomes could shape how AI hardware is designed and who leads the market in the years ahead.