Microchips, also known as integrated circuits (ICs), are the essence of technology. A microchip is a small, flat piece of semiconductor material, usually silicon, filled with tiny electronic parts working together.
Microchip parts include transistors, resistors, and capacitors. These components cooperate for functions like information processing, execution of commands and communication.
They power diverse systems such as smartphones, laptops, aerospace equipment, medical and heavy machinery. The average smartphone contains 20 - 30 microchips.
Making Microchips
Creation of a microchip starts in a highly controlled environment or clean room. The room is kept dust-free to protect sensitive materials. Much of the construction is done by precision machines.
Design: Engineers use software to map the layout of the microchip, defining position and function of each transistor, resistor, and all other components. The design is translated into a series of photomasks.
Silicon Ingots: Ultra-pure silicon is melted and grown into large, cylindrical ingots. The ingots are then sliced into thin, circular wafers.
Layering and Etching: The wafers are then subjected to a series of layering processes. Thin films of materials such as silicon dioxide, silicon nitride and metals like copper or aluminum, are deposited onto the wafer surface.
Techniques like chemical vapor deposition and physical vapor deposition layer materials with precision. A single microchip can have layers only a few nanometers thick. A nanometer is a millionth of a millimeter.
Using the photomasks created in the design stage, these layers are etched away in specific patterns using photolithography. This process projects ultraviolet light through the photomask onto a photoresist layer.
The exposed photoresist is dissolved, leaving behind a pattern used to etch the underlying material. Layering and etching repeat hundreds of times to build up the complex 3D structure of the microchip.
Doping: Doping involves introducing impurities into the silicon wafer to alter its electrical conductivity.
Testing and Dicing: Once the wafer fabrication is complete, each individual chip is tested to ensure it functions correctly. Faulty chips are marked for rejection. The wafer is then diced, or cut, into individual chips.
Packaging: The individual chips are packaged in protective casings made of ceramic or plastic. These packages give mechanical support, protect the chip and provide electrical connections to the outside world.
Components and Materials
Transistors: These are the fundamental switching elements of a microchip. They control the flow of electricity like on/off switches.
Resistors: These restrict and stabilize the flow of electricity.
Capacitors: These store and release electrical energy.
Silicon (Si): The primary semiconductor material used in microchips.
Silicon Dioxide (SiO2): An insulating material used to separate and isolate different components.
Interconnects: These pathways connect various components within the chip, allowing effective communication.
Copper (Cu) or Aluminum (Al): Metals used to create interconnects carrying electrical signals between transistors and other components.
Photomasks: Precision stencils used in the photolithography process.
Photoresist: A light-sensitive material used to create patterns on the wafer.
Economic & Market Value
The microchip industry is a massive global market. Demand for microchips is driven by ever-increasing use of electronic devices in modern life. The industry is highly competitive.
Companies make major investments in research and development to create smaller and faster chips. Cost of building and maintaining a state-of-the-art microchip fabrication facility or fab can run to billions of dollars.
The global microchips market size was USD 80.02 billion in 2023 and 86.26 billion in 2024. It's anticipated to reach 181.26 billion by 2034, expanding at a CAGR of 7.71% from 2024 to 2034.
Global Production Leaders
Taiwan Semiconductor Manufacturing Company (TSMC): The world's largest dedicated independent (pure-play) semiconductor foundry. Many companies design chips, but TSMC specializes in manufacturing them.
TSMC leads the contract manufacturing sector, producing chips for major firms, including Apple and Nvidia. As of 2023, TSMC holds a market share of 54%.
In 2024 TSMC is ordered by the US to halt shipments to China of advanced chips, especially those used in AI. This follows reports of TSMC chips found in products from sanctioned Chinese companies like Huawei.
Samsung Electronics: A South Korean conglomerate involved in all aspects of the electronics industry, including microchip design and manufacturing.
Intel Corporation: A US-based company. It designs and manufactures microprocessors and other semiconductor products.
Other significant makers include Micron Technology, SK Hynix and GlobalFoundries. Geopolitical factors have strong effects on the industry. Governments invest in domestic manufacturing for supply chain security.
Uses
Computers and Smartphones: Central Processing Units (CPUs) and Graphics Processing Units (GPUs) are complex microchips that perform the calculations necessary for these devices to function.
Automobiles: Modern cars contain dozens of microchips to control such systems as engine, transmission, infotainment and safety features. Chips manage engine control units.
Consumer Electronics: Televisions, gaming consoles, appliances, and countless other consumer products rely on microchips.
Healthcare: Medical devices such as pacemakers, imaging equipment, and diagnostic tools use microchips to improve patient care. Medical equipment, like MRI machines and wearable health monitors, uses microchips to enhance performance and diagnostics.
Industrial Automation: Microchips control robots, sensors, and other equipment in manufacturing facilities.
Aerospace and Defense: Aircraft, satellites, and weapons systems rely on microchips for navigation, communication and control.
Facts About Microchips
Submicron Manufacturing: Modern microchips are made using techniques to enable features smaller than one micrometer (one thousandth of a millimeter). This requires precise equipment and controlled environments.
Microchips get smaller while becoming more powerful. For example, in the 5-nanometer process technology, billions of transistors fit on a single chip.
Environmental Impact: The microchip manufacturing process can generate waste. It's a carbon footprint has led industries to seek sustainable practices, such as using renewable energy sources.
Global Supply Chain: The microchip production process is reliant on a complex supply chain around the globe, making it vulnerable to disruptions like natural disasters or trade restrictions.
In 2022 The US manufactures around 10-12% of the world's semiconductors, down from 37% in 1990, and none of the most advanced chips. This prompts the CHIPS Act to boost domestic production.
In 2024, the U.S. semiconductor industry shows significant growth and investment. Focus is on expanding domestic chip production and strengthening supply chains.
Microchip to Bargaining Chip
In August 2024, companies in the semiconductor ecosystem announce more than 90 new manufacturing projects in the US since CHIPS is first introduced in Congress. This totals nearly $450 billion in announced investments across 28 states.
In 2025 focus shifts to imposing high tariffs on foreign microchip companies such as Taiwan's TMCS. The US accuses TMCS of inhibiting domestic production.
Recently TMCS pays the US $100 billion to avoid threatened tariffs and buy benefits like protection from China. The company promotes the payoff as an investment in American business.
In world trade, Apple is TMCS's largest customer, accounting for over 25% of TMCS's revenue. The company supplies critical chips like the A-series and M-series for flagship products such as iPhones, iPads, and Macs.
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