What is a semiconductor and how is it used? (2023)

What is a semiconductor?

A semiconductor is a material product, generally silicon, that conducts electricity better than an insulator like glass but less than a pure conductor like copper.copperor aluminum. Its conductivity and other properties can be altered by the introduction of impurities, called doping, to meet the specific needs of the electronic component in which it resides.

Semiconductors, also known as semi-finished products or chips, are found in thousands of products such as computers,Smartphones, home appliances, gaming hardware and medical equipment.

the central theses

  • A semiconductor, found in thousands of electronic products, is a material that conducts electricity better than an insulator, but less than a pure conductor.
  • There are four basic types of semiconductors.
  • The semiconductor industry lives and dies by a simple credo: smaller, faster and cheaper.
  • Investors should keep in mind that the semiconductor industry is very cyclical and is subject to periodic booms and busts.
  • Aside from investing in specific companies that manufacture semiconductors, there are also ETFs, index funds, and indices that divide the industry into chip makers and chip equipment makers.

Understand semiconductors

Semiconductor devices can have a variety of useful properties, such as: B. a variable resistance, easier current flow in one direction than the other, and a response to light and heat. Its actual function includes signal amplification, switching and power conversion.

Therefore, they are widely used in almost all industries, and the companies that manufacture and test them are considered excellent.indicatorsthe health of the wholebusiness.

The semiconductor industry is a very important sector for the US and world economy, with semiconductor components found in a wide range of consumer and commercial products, from vehicles to computers, mobile devices and gadgets.

(Video) What Is A Semiconductor?

types of semiconductors

Semiconductors come in two main types based on the elements that are included with the silicon, a process known as "doping." These "impurities" are introduced into the crystalline silicon to change the properties of the finished semiconductor:

  • andType NoSemiconductors contain one or more impurities based on pentavalent atoms such as phosphorus, arsenic, antimony and bismuth
  • Atype pSemiconductor has dopants with five electrons in its valence shell. Phosphorus is commonly used for this purpose, as are arsenic or antimony.

use of semiconductors

Broadly speaking, semiconductors fall into four main product categories:


Memory chips act as temporary data stores, transferring information to and from the brains of computing devices.Memory market consolidation continues, driving memory prices so low that few giants like Toshiba, Samsung and NEC can afford to stay in the game.


These are central processing units that contain the basic logic to perform tasks.Intel's dominance of the microprocessor segment has pushed almost all of its other competitors, with the exception of Advanced Micro Devices, out of the mainstream market and into smaller niches or entirely different segments.

Commodity Integrated Circuit

These are sometimes referred to as "standard chips" and are manufactured in large batches for routine processing purposes. Dominated by big Asian chipmakers, this segment offers tiny profit margins that only the largest semiconductor companies can compete for.

complex SOC

"System on a chip" is essentially the creation of an integrated circuit chip with complete system capability. The market revolves around the growing demand for consumer products that combine new features and lower prices. With the doors to the memory, microprocessor and basic IC markets firmly closed, the SOC segment is arguably the only one that still has ample opportunity to attract a wide range of companies.

semiconductor industry

Success in the semiconductor industry depends on developing smaller, faster, and cheaper products. The advantage of being small is that more power can be packed onto the same chip. The more transistors there are on a chip, the faster it can do its job. This creates fierce competition in the industry and new technologies are reducing itproduction costspro Chip

This led to the above observationsMoore's law, which states that the number of transistors in a denseintegrated circuitIt doubles about every two years. The observation is named after Gordon Moore, co-founder of Fairchild Semiconductor and Intel, who wrote a paper describing it in 1965.Today, the doubling period is often given as 18 months, the number cited by Intel executive David House.

(Video) What is a semiconductor?

As a result, chipmakers are under constant pressure to create something better, and even cheaper, than what was defined as cutting-edge technology just a few months ago. So semiconductor companies need to stay biginvestigation and developmentBudgets The semiconductor market research association IC Insights reported that semiconductor companies are expected to increase their research and development budgets by 9% in 2022. They also forecast that the compound annual growth rate (CAGR) will also increase by about 5.5% between 2022 and 2026.

semiconductor manufacturing

Traditionally, semiconductor companies controlled the entire production process, from design to manufacture. However, many chipmakers are increasingly outsourcing production to others in the industry. Foundry companies whose only business is manufacturing have recently come to the fore and offer attractive outsourcing options. In addition to the foundries, the ranks of increasingly specialized chip designers and testers are beginning to grow. Chip companies are developing more agile and efficient.Chip production now resembles a gourmet restaurant kitchen, where chefs line up to add just the right amount of spice to the mix.

In the 1980s, chipmakers lived on returns (number of working devices out of all made) of 10% to 30%. Chip makers are now aiming for yields (number of control gears out of all made) of no less than 90%. This requires very complex manufacturing processes.

As a result, many semiconductor companies engage in design and marketing, but choose to do sosubcontractpart or all of the production. known asno fableChipmakers, these companies have high growth potential because they are not weighed down by the overheads associated with manufacturing or "manufacturing."

Invest in the semiconductor industry

Apart frominvest in individual companies, there are several ways to monitor the investment performance of the sector in general. This includes the reference pointPHLX semiconductor index, known as SOX, as well as its derived forms inexchange traded funds. There are also indices that divide the sector into chip makers and chip equipment makers. The latter develops and sells machines and other products for the design and testing of semiconductors.

In addition, certain overseas markets such as Taiwan, South Korea and to a lesser extent Japan are highly dependent on semiconductors and therefore theirsindicesThey also provide clues about the health of the worldIndustry.

Special Considerations for Investments in Semiconductors

If semiconductor investors can remember one thing, it's that the semiconductor industry is very cyclical.Semiconductor manufacturers often experience "boom and bust" cycles based on underlying demand for chip-based products. when times are goodprofit marginsit can get very high for chipmakers; However, when demand falls, chip prices can drop dramatically, with major implications for many industries.supply chains.

Demand generally follows end-market demand for personal computers, mobile phones and other electronic devices. When times are good, companies like Intel and Toshiba can't produce microchips fast enough to keep up with demand. When times are tough, they can be downright brutal. For example, slow PC sales can send the industry — and its stock prices — into a tailspin.

(Video) What is Semiconductor?

At the same time, it makes no sense to speak of the "chip cycle" as if it were an event of a singular nature. While semiconductors remain fundamentally a commodity business, their end markets are so numerous (PCs, communications infrastructure, automotive, consumer products, etc.) that overcapacity in one area is unlikely to collapse.

The Risks of Cyclicality

Surprisingly, the cyclical nature of the industry can give investors some level of reassurance. In some other technology sectors, such as B. telecommunications equipment, one can never be entirely sure whether wealth is cyclical or notworldly. On the contrary, investors can be almost certain that the market will change at some point in the not too distant future.

While cyclicality offers some comfort, it also poses risks for investors. Token makers are routinely required to engage in high-stakes gambling. The big risk is that after a major development project, it can take many months or even years for companies to figure out if they hit the jackpot or screwed everything up. One cause of the lag is the interlocking but fragmented structure of the industry: different sectors make highs and lows at different times.

For example, the bottom line for foundries often comes much earlier than for chip designers. Another reason is the long history of the industrywaiting period: It takes years to develop a chip or set up a foundry and even longer for the products to make money.

Semiconductor companies face the classic dilemma of whether technology drives the market or the market drives the technology. Investors need to recognize that both apply to the semiconductor industry.

Because companies spend a large portion of their revenue on research and development that can take months or even years to pay back (and sometimes not even if the technology is flawed), investors should be wary of statements made by companies that claim to have latest technology to feature technology. and the best technology in the semiconductor industry.

(Video) Why we use Semiconductors? IN JUST 5 MINS

How is a semiconductor different from a conductor or an insulator?

A semiconductor essentially functions as a hybrid of a conductor and an insulator. While conductors are highly conductive materials that allow charge to flow when a voltage is applied to them and insulators do not allow current to flow, semiconductors act alternately as an insulator and conductor when needed.

What is an N-type semiconductor?

An n-type semiconductor is a mixed impurity semiconductor that uses pentavalent impurity atoms such as phosphorus, arsenic, antimony, and bismuth.

What is a P-type semiconductor?

A p-type semiconductor is a type of extrinsic semiconductor that contains trivalent impurities such as boron and aluminum, which increases the conductivity of a normal semiconductor made entirely of silicon.

What is an intrinsic semiconductor?

An intrinsic or pure semiconductor is a semiconductor that has no additional impurities or dopants, as is the case with p-type and n-type semiconductors. In intrinsic semiconductors, the number of excited electrons and the number of holes are the same: n=p.

(Video) How semiconductors work

The final result

Semiconductors literally move the world today. Without semiconductors, there would be neither computers nor the Internet, cell phones or flat screen televisions. It is therefore not surprising that the semiconductor industry plays a prominent role in the global economy. The sector also remains a hub of innovation as Moore's Law continues to work its magic, producing more powerful microchips that are cheaper to manufacture over time.


1. ‘Semiconductor Manufacturing Process’ Explained | 'All About Semiconductor' by Samsung Semiconductor
(Samsung Semiconductor Newsroom)
2. A world without semiconductors - Nicole Scott's visit at the Bosch semiconductor factory
(Bosch Global)
3. How are microchips made?
(Interesting Engineering)
4. Semiconductor production process explained
(Bosch Global)
5. The Semiconductor Terms That You Must Know | 'All About Semiconductor' by Samsung Semiconductor
(Samsung Semiconductor Newsroom)
6. How Does a Transistor Work?


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