SiP technology combines multiple ICs, discrete and passives components onto a single package. This provides a complete functional system in one module that can be processed much like a standard component during board assembly. In contrast with System-on-Chip (SoC), where a single die is used, SiP packages are integrated by stacking or placing one or more chips along with SMT components on a substrate such as a BGA laminate or a QFP leadframe.

The high-density packaging used in a SiP can offer developers significant performance enhancements over traditional discrete component level designs, and even over many SoC-based designs.  Memory bandwidth, for example, is often one of the critical limiting factors preventing digital designers from realizing their latest multimedia or data-intensive applications.  Mixed signal products such as mobile phones require digital, analog and RF electronics to work reliably in close proximity to each other. The most important advantage of SiP technology may be the integration of passive components directly onto the package substrate.  Mixed signal communication products usually require a number of passives in both the analog and RF design sections, and integration can potentially deliver substantial size reductions and performance improvements.