What it is
A fab, or fabrication plant, is a highly specialized and capital-intensive factory where semiconductor chips are manufactured. Inside a fab, silicon wafers undergo hundreds of complex steps, including lithography, etching, and deposition, in a meticulously controlled cleanroom environment. These processes transform raw silicon into functional integrated circuits, forming the foundation of modern electronics. Building and operating a fab requires billions of dollars and highly skilled labor.
Fabs are critical to the global semiconductor supply chain, with their output directly influencing the availability of chips for various industries. The location and capacity of fabs are often subjects of geopolitical and economic policy, as governments seek to secure domestic chip production. News frequently reports on new fab construction, technological advancements like EUV lithography, and the impact of fab outages on global supply.
Why it matters
Fabs are where the actual chips are made, directly affecting the supply, cost, and technological advancement of every electronic device on the market.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice