MoneyWeek

The industry at the heart of global technology

“Nvidia, the poster child of the sector, doesn’t actually make its own chips”

The semiconductor industry is a catch-all term for the broad range of companies that design, manufacture and sell microchips. Microchips, or chips, are a collection of switches controlled by electrical pulses. These switches are printed onto a board using a semiconductor material, such as silicon, or to a lesser extent germanium. The conductive nature of the board allows components to be etched into the material in layers, along with the connections to facilitate the flow of electrical signals.

The thinner and more conductive the semiconductor material, the more components that can be included and the more powerful the chips. The latest tech allows 50 billion components to be included on a chip the size of a fingernail.

Logic and memory

There are two main types of chips: logic chips, which do the calculations, and memory chips, which store data for use in calculations. Central processing units (CPUs) and graphic processing units (GPUs) form the backbone of the logic-chip market. GPUs are superior to CPUs as they can perform multiple calculations at the same time. These units break down complex calculations and then work on the component parts, making them vital for highly complex repetitive tasks, such as those performed by artificial intelligence (AI).

CPUs and GPUs sit at the core of computer systems, and they perform the central functions. They form the brain of the device. Around the main processors sit the chips that facilitate the functioning of other inputs that feedback into the brain, such as the Bluetooth transmitter or the

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