The semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
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 5G-network receiver. Most brains can only perform so many calculations, so they need to store data while they process parts of the calculation or other bits of work. That is where memory chips come into play. All of these different chips are extensions of the brain. Without them, the device won’t work and without the brain, the other chips won’t work.
This is a simple overview of how electronic devices work, but it’s enough for investors to understand where the key markets lie. Processors are complex and unique devices that cost billions to develop, and as the performance of the device relies on an efficient processor, that is where the real value lies.
The most advanced form of logic chip currently on the market is Nvidia’s Blackwell B200 GPU. This chip has 208 billion transistors, and Nvidia has designed a platform
