Some embodiments of the invention provide a method for performing thermal analysis of a multi-die integrated circuit (IC) design layout. The thermal analysis produces a temperature distribution for analyzing internal properties of each die within the multi-die design and for analyzing thermal interactions between two or more dies of the design based on an internal configuration of the two or more dies. Therefore, in some embodiments, the temperature distribution shows a temperature distribution for each die and the individual temperature distributions show varying temperature across each of the dies. Some embodiments reduce the number of iteration required to perform the thermal analysis by constructing a high quality preconditioner based on thermal conducting segments introduced to model thermal effects at the boundaries between two dies.