Why Chiplets Are Suddenly Central to US Chip Policy

Federal incentives for advanced packaging are steering chipmakers to localise R&D and align supply chains around chiplet technologies

18 Dec 2025

A shift in US industrial policy is elevating advanced packaging and chiplets to a central role in the country’s semiconductor strategy, as federal incentives begin to shape where future chips are designed and assembled.

The launch of the National Advanced Packaging Manufacturing Program signals that packaging, long treated as a supporting step, is now viewed as a strategic capability. The programme directs public funding towards technologies expected to underpin long-term competitiveness, with an emphasis on locating more of this work in the US.

Advanced packaging allows multiple pieces of silicon to operate as a single system, improving performance and efficiency. While critical to modern chips, much of this work has historically been carried out in Asia. Policymakers now see this dependence as a vulnerability, particularly as demand grows from artificial intelligence and high-performance computing.

“This is a turning point for advanced packaging in the US,” said a senior semiconductor analyst at a Washington-based policy group. “Packaging is now being recognized as a strategic capability rather than a supporting function.”

The programme is managed by the National Institute of Standards and Technology under the CHIPS for America initiative. Funding eligibility extends beyond capital spending to include where research is carried out, how projects are coordinated, and how innovations move towards commercial production. Companies are expected to outline credible paths to US-based manufacturing, reinforcing the focus on practical outcomes.

Large suppliers are adjusting their plans accordingly. Applied Materials and Absolics are involved in federally backed projects aimed at advanced substrates and packaging processes. Intel’s growing focus on chiplet-based architectures also reflects a broader shift within the industry, supported by clearer signals from government funding priorities.

The effects are not limited to large companies. By encouraging collaboration with universities and research institutes, the programme is intended to draw in start-ups and smaller suppliers, helping to build a domestic ecosystem. Industry groups, however, note that cost-sharing requirements and administrative demands may be difficult for less well-resourced firms.

Analysts tracking semiconductor supply chains describe sentiment as cautious but positive. As demand for advanced chips rises, packaging is increasingly seen as a source of growth rather than a constraint. By tying funding to clear objectives, US policymakers are placing chiplets and advanced packaging at the core of efforts to rebuild the domestic semiconductor industry.