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lnternal stress, as a result of temperature cycle testing (TCT), causes package cracking, passivation film cracking, aluminum pattern deformation, etc. This is particularly evident in IC's and LSI devices with large-size chips and larger memory capacity. Greater reduction of internal stress imparted by resin encapsulants is required to address these problems. To reduce the internal stress, it was previously determined that it is effective to introduce very small sized silicone domains into the epoxy matrix and to create a strong interaction layer between the domain/matrix interface in a heterogeneous structure where soft polymer particles are dispersed as domains in the epoxy matrix as a continuous phase. To date, research efforts have yielded epoxy resins having about 0.1-µm domains with a strong interaction layer at the domain/matrix interface using special silicone modifiers. Comparisons were. made between silicone-modified epoxy resins having 2-5-µm domains and smooth domain/matrix interfaces with versions having 0.1'µm domains. From these comparisons we have drawn the following conclusion: as the silicone domain size decreases within the epoxy matrix, the internal stress imparted by the encapsulant decreases as measured by temperature cycle testing.