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An embedded overlay concept for packaging hybrid components containing microelectromechanical systems (MEMS) is described. This packaging process is a derivative of the chip-on-flex (COF) process currently used for microelectronics packaging. COF is a high performance, multichip packaging technology in which die are encased in a molded plastic substrate and interconnects are made via a thin-film structure formed over the components. A laser ablation process has been developed which enables selected areas of the COF overlay to be efficiently ablated with minimal impact to the packaged MEMS devices. Analysis and characterization of the ablation procedures used in the standard COF process was performed to design a new procedure which minimized the potential for heat damage to exposed MEMS devices. The COF/MEMS packaging technology is well-suited for many microsystem packaging applications such as micro-optics and radio frequency (RF) devices.