William Shockley believed semiconductors held the key to a better "switch" than vacuum tubes. He conceptualized a new type of transistor in 1948 made of three semiconductor chunks that could amplify a small current. Jack Kilby of Texas Instruments invented the integrated circuit, or "chip," by assembling multiple components on the same piece of semiconductor material. Robert Noyce of Fairchild also invented an integrated circuit and devised a more reliable manufacturing method by depositing a protective layer. Noyce's integrated circuits were used in the Apollo program because they were smaller, lighter, and used less electricity.

Jay Lathrop, working at Texas Instruments, invented photolithography in 1957, a process of "printing" with light to create much smaller transistors, enabling mass production. This involved using photoresist chemicals and a modified microscope lens.

Early chip assembly was often done by women who could be paid lower wages. Charlie Sporck, focused on efficiency, managed labor at Fairchild and later National Semiconductor, offshoring assembly to Asia (Hong Kong, Singapore, Malaysia) where labor costs were significantly lower.

Texas Instruments engineer Weldon Word developed the first laser-guided bomb using microelectronics, dramatically increasing accuracy in Vietnam. This exemplified the growing importance of semiconductors in military technology.

In the 1980s, the U.S. semiconductor industry faced strong competition from Japan, particularly in DRAM (dynamic random-access memory) chips. Companies like GCA struggled against Japanese firms like Nikon in lithography equipment.

Despite initial setbacks, the U.S. industry saw a resurgence. J.R. Simplot invested heavily in Micron, which focused on cost-cutting to compete in the DRAM market. Intel, under Andy Grove, restructured to become more competitive.

Morris Chang founded Taiwan Semiconductor Manufacturing Company (TSMC) in 1987, pioneering the pure-play foundry model where they manufactured chips designed by other companies. This revolutionized the industry and enabled the rise of "fabless" chip design firms.

Extreme ultraviolet (EUV) lithography, developed by ASML with crucial U.S. contributions, became essential for manufacturing increasingly smaller and more powerful chips.

Today, semiconductors are critical to geopolitics, particularly in the context of U.S.-China competition. The U.S. has taken actions to restrict Chinese companies' access to advanced chips. The global semiconductor supply chain is complex and faces challenges, as highlighted by the 2021 shortage and geopolitical tensions surrounding Taiwan and TSMC's central role. The U.S. military relies on commercially produced chips, often from Taiwan.