A package includes a first device die, and a second device die bonded to the first device die through hybrid bonding. The second device die is larger than the first device die. A first isolation region encapsulates the first device die therein. The first device die, the second device die, and the first isolation region form parts of a first package. A third device die is bonded to the first package through hybrid bonding. The third device die is larger than the first package. A second isolation region encapsulates the first package therein. The first package, the third device die, and the second isolation region form parts of a second package.