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Semiconductor (or chip) has been a buzzword recently among investors, politicians and companies from various sectors. But what exactly is a “semiconductor”?

It is a substance that sits between a conductor and an insulator. It allows a degree of control over the flow of electricity. Through a specific process, it can form different types of devices that are used in many electronic appliances.

For instance, one of the elements found in a chip is transistors. It acts as both an amplifier and an electrical switch to control the current. When these transistors are put together, it forms a device that process binary information – the code 1 and 0 used by computer. This device is known as “logic”.


In general, there are 3 main categories of semiconductor devices:

#1: Integrated Circuits (ICs)

ICs has multiple electrical elements such as transistors, diodes, resistors, capacitors and etc. Linking these electrical elements together in a chip will form devices that has specific functions. Below are 3 main devices that can be made:

Device Functions
Logic Able to perform certain logical operation based on inputs provided. Mainly found in CPUs used in computers and smartphones.
Memory Able to store information, e.g. NAND flash memory used in USB drives or solid-states hard drive.
Analog Able to transform or generate signals from electricity to radio waves or light. Applications such as phone calls are dependent on this Analog ICs.

#2: Discrete Semiconductors

Device that controls electric current such as voltage regulation, surge protection or power conversion usually require this semiconductor. It consists of transistors, rectifiers, and diodes.

#3: Optoelectronics and Sensors

These are mainly used in generating or sensing light. For example, solar powered LED traffic light or cameras.


Currently, silicon is the industry standard for chip production even though there are other types of semiconductor materials. This is because it is cheapest amongst the other materials.

Below is an illustration of the process in making semiconductors:

Chip Making Process


According to Semiconductor Industry Association , the global sales of chips increases by 29.7% y-o-y in August 2021. As an investor, I would want to invest in this growing sector. But the big question is which company to invest in? To answer this, you must first understand the semiconductor value chain.

Below is an overview of the entire semiconductor value chain:

At its core, there are 5 main sections. The other sections which are outside of this core value chain are mainly supporting activities – materials and equipment suppliers. The “Manufacturing” is where the above chip making process comes in.

In my next post, I will talk more in detail regarding each section of the value chain. Stay tuned!

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Thomas Chua

Founder of 足球电子竞技 . Prior to this, he was as an external auditor where he perform statutory audit on listed companies from various industries. He also involved in Enterprise Risk Management exercise and Internal Control Framework Review for entities undergoing IPO in Bursa Malaysia and SGX Catalyst Board. He is also a member of ACCA.

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