Semiconductors: The Key to Modern Technology, Explained

Semiconductors are essential for modern technology. Without them, our world would be a very different place.
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Semiconductors, often referred to as chips, are the unsung heroes that power our modern digital world. These tiny devices, no larger than a fingernail, play a crucial role in virtually every electronic device we use, from smartphones and laptops to cars and even household appliances. While the concept of semiconductors might seem basic, their production process and global supply chain are complex and intricately interconnected. In this blog post, we delve into the world of semiconductors, exploring what they are, how they are produced, the intricate supply chain that sustains them, and the geopolitical implications that have brought them to the forefront of global discussions.

What are Semiconductors?

Semiconductors are electronic components made from materials, typically silicon, that have properties between those of conductors (materials that allow electricity to flow freely) and insulators (materials that block electricity). This unique property allows semiconductors to control the flow of electric current and enable various functions in electronic devices. At the heart of every semiconductor lies a network of tiny switches called transistors, which can be turned on and off to manipulate electrical signals.

Semiconductors are materials that have electrical properties that fall somewhere between conductors and insulators. This makes them ideal for use in electronic devices, as they can be used to create switches and amplifiers that can be controlled with electrical signals.

The most common semiconductor material is silicon. Silicon is a relatively abundant element that is easy to purify and process. It is also a relatively inert material, which means that it does not react easily with other materials. This makes it ideal for use in electronic devices that need to be stable and reliable.


Semiconductors are used in a wide variety of electronic devices. Some of the most common applications for semiconductors include:

  • Computers and smartphones: Semiconductors are used to create the microprocessors and memory chips that are essential for these devices.
  • Cars: Semiconductors are used in the control systems for cars, including the engine, brakes, and transmission.
  • Medical devices: Semiconductors are used in a variety of medical devices, including pacemakers, MRI machines, and insulin pumps.
  • Solar panels: Semiconductors are used to convert sunlight into electricity in solar panels.

The Semiconductor Supply Chain

The journey of a semiconductor from design to the final product involves multiple stages and a complex global supply chain. Here’s a step-by-step breakdown of the process:

  1. Design: The semiconductor design process involves using specialized software to create intricate layouts of transistors and other components. This design software is typically developed by a handful of dominant firms, mostly based in the United States.
  2. Manufacturing Tools: Advanced manufacturing tools are needed to produce semiconductors with precision. These machines, capable of working at nearly atomic scales, are used for tasks like depositing thin films and etching patterns on silicon wafers. The production of these tools is a specialized field dominated by a few companies in the Netherlands, California, and Japan.
  3. Materials: High-purity materials are essential for semiconductor fabrication. Ultra-pure silicon wafers, specialized chemicals, and gases are required for the manufacturing process. Japan is known for its expertise in producing these materials.
  4. Fabrication: The manufacturing process involves etching microscopic patterns onto silicon wafers using the specialized tools. This process creates the transistors and other components that define the functionality of the semiconductor.
  5. Packaging and Assembly: After fabrication, the chips are packaged and assembled into devices. This final step is often carried out in countries like Taiwan, China, or Southeast Asia.

Read more: How Chip Fabrication Is Like Printing a Book

Key Players in the Semiconductor Supply Chain

Several key players and regions dominate the semiconductor supply chain:

  1. United States: The US is a leader in chip design, with a few dominant firms specializing in semiconductor design software. It is also actively investing in semiconductor manufacturing through initiatives like the CHIPS Act.
  2. Taiwan: Taiwan Semiconductor Manufacturing Company (TSMC) is a global leader in semiconductor manufacturing. Its cutting-edge facilities produce chips for a wide range of applications.
  3. Japan: Japanese companies are known for their expertise in manufacturing tools and high-purity materials required for chip fabrication.
  4. Netherlands: The Netherlands is a crucial player in producing advanced manufacturing tools, such as those used in the fabrication process of semiconductors. These tools are instrumental in creating the intricate patterns and structures on semiconductor wafers.
  5. China: China is investing heavily in its semiconductor industry, aiming to achieve technological independence. However, it faces challenges due to its relative latecomer status and restrictions on accessing cutting-edge technology.
  6. South Korea: Domestic companies began investing in their own semiconductor production in the 1980s. Since then, Samsung Electronics and SK Hynix have survived through the years and have placed themselves among the leading semiconductor manufacturers worldwide. Recent trends such as the growing interest in artificial intelligence and a further push from the South Korean government bodes well for the industry moving forward.

Geopolitical Implications and Competition

The semiconductor industry has become a focal point of geopolitical competition, particularly in the context of the US-China rivalry. The reasons for this are multifaceted:

  1. Strategic Importance: Semiconductors are critical for defense and intelligence applications. Countries recognize that cutting-edge chips are essential for maintaining a competitive edge in fields like artificial intelligence and advanced military systems.
  2. National Security: Governments view control over semiconductor supply chains as vital for national security. This has led to export restrictions and investment in domestic manufacturing capabilities to reduce dependence on other nations.
  3. Global Economic Impact: The pandemic highlighted the importance of semiconductors, as their shortage disrupted industries and economies worldwide. Countries are keen to secure their chip supply chains to avoid future disruptions.
  4. Technological Leadership: Being at the forefront of semiconductor technology enables countries to lead in innovation and maintain economic competitiveness.


Semiconductors have evolved from an obscure component to a central pillar of our digital society. The intricate web of chip design, manufacturing, and supply chains involves a handful of dominant players and requires cutting-edge expertise and precision. Geopolitical tensions have further elevated the significance of semiconductors, shaping global strategies, and prompting investments in research, development, and manufacturing. As the world navigates this complex landscape, the semiconductor industry’s future will undoubtedly impact technological advancement, economic growth, and national security on a global scale.

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