Semiconductors are chips, and the word also names the industry that designs and makes them. The name comes from silicon, which is a semiconductor: a material that can be made either to carry an electric current or to block it. A chip, or integrated circuit, is a small piece of silicon that carries billions of transistors. A transistor is a tiny electrical switch. It turns a current on or off, and billions of these switches together can store numbers and do arithmetic. Every phone, laptop, car and server runs on chips.
A chip is made in two very different places. First it is designed, and for years it exists only as code and drawings. Then a factory manufactures it, layer by layer, and it is tested. Most chip companies do only the first part. They are called fabless companies, because they own no fabrication plant, or fab.
The first stage is chip design. Here is a typical case. A team at a design centre in Bengaluru starts a new chip. It rarely designs every part itself. It licenses a ready-made processor core through processor IP licensing, and it will pay a small royalty on every chip later sold. The engineers describe the rest of the circuits in a hardware description language, a kind of code that describes circuits, such as Verilog. All of this work happens in electronic design automation (EDA) software. For months, engineers in chip design verification run the design in software to prove that it behaves correctly. Then physical design places every transistor and draws every wire. The finished layout is sent to the factory. This moment is called tape-out. The whole sequence is the VLSI design flow. Bengaluru, Hyderabad and Noida hold some of the world's largest chip design centres, so Indian engineers do much of this stage.
The second stage is fabrication and test. A semiconductor foundry is a fab that makes chips for other companies. The leading ones are in Taiwan, South Korea and the United States. Chips are made many at a time on a wafer, a thin disc of silicon usually 300 millimetres across. Over about three months, manufacturing equipment lays very thin layers on the wafer and etches the circuit pattern into each one. Inspection systems check every layer for defects. The finished wafer is then cut into dies. A die is one chip, still bare. In an assembly and test plant, each die is sealed in a package, the small black case with metal contacts that is soldered onto a circuit board. Then every packaged chip is tested.
Not every chip on a wafer works. The share that works is called the yield, and the fab earns money only on those chips. This is why so much effort goes into checking, both in design and in the fab.
Generations of manufacturing are named in nanometres, such as "28 nm" or "3 nm". A nanometre is a billionth of a metre. Today the name is a label for the generation. It is no longer the measured size of any one part of a transistor. A newer generation fits more transistors into the same area.
India designed chips for decades without making them. That is now changing. Tata Electronics is building India's first commercial fab at Dholera in Gujarat, and assembly and test plants are being built at Sanand in Gujarat and Jagiroad in Assam. The page on semiconductor fabs in India explains what they will make.