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This paper presents the design and demonstration of a novel die-to-die interconnect system for deployment in system-in-package (SiP) applications with adjacent or stacked-die configurations. The interconnect system consists of miniature coaxial cables that are mounted to a standard Silicon substrate using an etched trench along the perimeter of the die. The trench serves as a self-alignment feature for both the signal and ground contacts in addition to providing mechanical strain relief for the coaxial cable. The system is designed to interface on-chip coplanar transmission lines to off-chip coaxial transmission lines to produce a fully impedance matched system. This approach promises to dramatically improve the electrical performance of high-speed, die-to-die signals by eliminating impedance discontinuities, providing a shielded signal path, and providing a low-impedance return path for the switching signal. The new interconnect system is designed to be selectively added to a standard wire bond pad configuration using an incremental etching process. This paper describes the design process for the new approach including the fabrication sequence to create the transition trenches. Finite-element analysis is performed to evaluate the electrical performance of the proposed system.