Electronic chips: their components, manufacturing, and global importance

Electronic chips: their components, manufacturing, and global importance

November 19, 2025
11 mins read
Discover the complex world of electronic chips, from their basic components and rare materials to their precise manufacturing process and their impact on the global economy and politics.

What are electronic chips? The mastermind of the digital age

Electronic chips, or integrated circuits, are the brains that power our modern world. They are tiny chips, primarily made of pure silicon, containing billions of microelectronic components called transistors. These chips act as the heart of almost every device we use, from smartphones and computers to cars, airplanes, and artificial intelligence systems, processing, storing, and executing data at incredible speeds.

Historical background: A revolution that changed the face of the world

Before the advent of microchips, electronic devices relied on bulky and inefficient vacuum tubes. But in the late 1950s, the independent invention of the integrated circuit by Jack Kilby and Robert Noyce revolutionized technology. This invention allowed multiple electronic components to be integrated onto a single, tiny chip of semiconductor material. This paved the way for Moore's Law, which predicted that the number of transistors on a chip would double approximately every two years, leading to a dramatic increase in computing power and an unprecedented miniaturization of devices.

Essential components and a complex manufacturing process

The chip industry relies on three main types of materials:

  • Semiconductors: The most important element is silicon, which is characterized by its ability to conduct or insulate electricity under certain conditions, making it ideal for the manufacture of transistors that act as precise electrical switches.
  • Connectors: Materials such as copper and aluminum are used to create the fine wire network that connects billions of transistors on the chip.
  • Insulators: Materials such as silicon dioxide are used to insulate circuits and prevent electrical interference between them.

The manufacturing process begins with a high-purity silicon alloy, which is cut into thin, circular wafers. These wafers then undergo a highly complex process known as photolithography in cleanrooms, free of any dust particles. During this process, multiple layers of electronic circuits are built onto the wafer with extreme precision, down to a few nanometers. This process can take hundreds of steps and extend over several months.

Strategic importance and technological warfare

Semiconductors are no longer just a commercial commodity; they have become a crucial strategic asset for national security and global economic competition. The concentration of their manufacturing in a few countries, most notably Taiwan, South Korea, and the United States, has created vulnerabilities in global supply chains, a fact that became glaringly apparent during the COVID-19 pandemic. This geographic concentration is the primary driver behind what is known as the “chip war,” particularly between the United States and China, as each power strives to ensure its technological superiority and limit its rival’s access to cutting-edge technologies.

Why are chips considered a rare and expensive commodity?

The high cost and relative scarcity of chips are due to several overlapping factors:

  • High manufacturing costs: Building a single advanced chip manufacturing (Fab) plant requires investments exceeding $20 billion, in addition to highly advanced technology and equipment.
  • Growing global demand: With the spread of the Internet of Things, artificial intelligence, and electric vehicles, the demand for chips is increasing at a rate that exceeds current production capacity.
  • Reliance on rare materials: Its manufacture includes rare earth elements and vital minerals such as cobalt, gallium, and tantalum, whose sources are concentrated in limited geographical areas, adding a geopolitical dimension to their availability.

The Kingdom's efforts to localize the semiconductor industry

Recognizing this strategic importance, the Kingdom of Saudi Arabia, within its Vision 2030, seeks to localize advanced technologies and build a knowledge-based economy. In this context, the King Abdulaziz City for Science and Technology (KACST) announced its success in designing and manufacturing 25 advanced electronic chips using Saudi expertise. This achievement, accomplished in collaboration with researchers and students from Saudi universities, represents a significant foundational step within the Saudi Semiconductor Program. It aims to develop national talent and support the research and development ecosystem in this vital field, which has numerous applications, including communications, sensor systems, and energy.

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