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I am confuse with Package on package and Flip chip. Are they classified as multi-chip modules (MCM)?

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Flip chip is about a single die. On the circuitry side solder balls are placed and the thing is mounted upside down on the PCB, hence the name.

Package on package (\$PoP\$) goes one step further: you have a flip chip, with another BGA on top of that, where the lower die occupies the place between the top die's solder balls.
The top die is not a flip chip; note the bonding wires. The bottom die is a flip chip, though the soldered balls aren't visible; the die should have been 1/10mm or so above its substrate.

enter image description here

Like many \$PoP\$ illustrations, this one shows a stacked die at the top, but that's not a requirement to talk about \$PoP\$.

A typical \$PoP\$ application would be to have a microcontroller below and a Flash or RAM device on top, since they will have to be tightly connected anyway.

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In the drawing, does the top die count as flip-chip? Doesn't flip-chip mean the chip is "upside-down" with its pads directly soldered to the substrate? – The Photon May 25 '12 at 17:41
@The Photon - you're right, that's not a flip chip. I'll fix my answer. – stevenvh May 25 '12 at 17:43
@stevenvh - Do you mean the middle die mounted upside down on the other substrate and both of them package together into a BGA? – pstan May 25 '12 at 18:24
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@pstan - only the die on the lower substrate is a flip chip. The stacked dies on the top substrate are bonded like they would have been in for instance a QFP. Both substrates are BGAs, and the solder balls of the top one have to be larger to keep room for the flip chip under it. The top substrate soldered onto the bottom one form the completed device, which will be soldered onto a PCB by means of the smaller solder balls at the bottom. – stevenvh May 26 '12 at 3:57

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