Though transistors were clearly an improvement over the vacuum tube, they still generated a great deal of heat, which damaged the computer's susceptible internal parts. The quartz rock eliminated this problem. Jack Kilby, an engineer with Texas Instruments, developed the integrated circuit (IC) in 1958.

The IC combined three electronic components onto a small silicon disc, which was made from quartz. Scientists later managed to fit even more components on a single chip, what they called a semiconductor. Because of this, computers became even smaller as more components were squeezed onto the chip. The use of an operating system that allowed machines to run many different programs at once with a central program that monitored and coordinated the computer's memory was another third-generation development.