The types of chips produced by semiconductor companies can be categorized in two ways. Usually, chips are categorized in terms of their functionality. However, they are sometimes divided into types according to the integrated circuits (ICs) used.

When looked at according to functionality, the four main categories of semiconductors are memory chips, microprocessors, standard chips and complex systems-on-a-chip (SoCs). When organized by types of integrated circuitry, the three types of chips are digital, analog and mixed.

Key Takeaways

  • Found in thousands of electronic products, a semiconductor is a material which conducts electricity more than an insulator but less than a pure conductor.
  • In broad terms, semiconductors can be classified into a small number of categories including memory chips, microprocessors, and integrated chips.
  • Understanding which sub-sector of semiconductors a company largely operates can help better evaluate it as an investment and correctly identify its direct competitors.

Memory Chips

From the perspective of functionality, semiconductor memory chips store data and programs on computers and data storage devices. Random-access memory (RAM) chips provide temporary workspaces, whereas flash memory chips hold information permanently unless erased. Read-only memory (ROM) and programmable read-only memory (PROM) chips cannot be modified. In contrast, erasable programmable read-only memory (EPROM) and electrically erasable read-only memory (EEPROM) chips can be changed.

Microprocessors

Microprocessors contain one or more central processing units (CPUs). Computer servers, personal computers (PCs), tablets and smartphones may each have multiple CPUs. The 32- and 64-bit microprocessors in PCs and servers are based on x86, POWER, and SPARC chip architectures. On the other hand, mobile devices typically use an ARM chip architecture. Less powerful 8-, 16- and 24-bit microprocessors turn up in products such as toys and vehicles.

Graphic Processing Units (GPUs)

Technically a type of microprocessor, Graphics Processing Unit (GPU) is capable of rendering graphics for display on an electronic device. The GPU was introduced to the wider market in 1999 and is best known for its use in providing the smooth graphics that consumers expect in modern videos and games. Before the arrival of GPUs in the late 1990s, graphic rendering was handled by the Central Processing Unit (CPU). When used in conjunction with a CPU, a GPU can increase computer performance by taking on some computationally-intensive functions, such as rendering, from the CPU. This accelerates how quickly applications can process since the GPU can perform many calculations simultaneously. This shift also allowed for the development of more advanced and resource-intensive software and activities such as cryptocurrency mining.

Standard Chips (Commodity ICs)

Standard chips, also known as commodity ICs, are simple chips used for performing repetitive processing routines. Produced in large batches, these chips are generally used in single-purpose appliances such as barcode scanners. Characterized by razor-thin margins, the commodity IC market is dominated by large Asian semiconductor makers. If an IC is made for a specific purpose, it is called an ASIC, or application-specific integrated chips.

The SoC, the newest type of chip, is the most welcoming to new manufacturers. In the SoC, all of the electronic components needed for an entire system are built into a single chip. The capabilities of a SoC are more extensive than those of a microcontroller chip, which generally combines the CPU with RAM, ROM, and input/output (I/O). In a smartphone, the SoC might also integrate graphics, camera, and audio and video processing. Adding a management chip and a radio chip results in a three-chip solution.

Taking the other approach to categorizing chips, most computer processors currently use digital circuits. These circuits usually combine transistors and logic gates. Sometimes, microcontrollers are added. Digital circuits use digital, discrete signals that are generally based on a binary scheme. Two different voltages are assigned, each representing a different logical value.

Analog Chips

Analog chips have been mostly, but not entirely, replaced by digital chips. Power supply chips are usually analog chips. Analog chips are still required for wideband signals, and they are still used as sensors. In analog chips, voltage and current vary continuously at specified points in the circuit. An analog chip typically includes a transistor along with passive elements such as an inductor, capacitors, and resistors. Analog chips are more prone to noise, or small variations in voltage, which can cause errors.

Mixed Circuit Semiconductors

Mixed circuit semiconductors are typically digital chips with added technology for working with both analog and digital circuits. A microcontroller might include an analog-to-digital converter (ADC) for connecting to an analog chip, such as a temperature sensor, for example. A digital-to-analog converter (DAC), conversely, can allow a microcontroller to produce analog voltages for making sounds through analog devices.

The Bottom Line

The semiconductors industry has been lucrative and dynamic, innovating across several lines of the computing and electronics market. Knowing what type of semiconductor a company makes, say CPUs vs. GPUs, vs ASICs, can help you make better and more informed investment decisions within the industry group.