A wafer is a foundational base used for building integrated circuits (ICs) and microchips. Microchips are fabricated onto this surface in a grid pattern. Each square on the grid is referred to as a die or chip.
Summary bq
Manufacturing can create defects at different locations on a wafer. A chip may fail if a critical defect lies within this area.

Wafer yield is the percentage of functional chips produced from a wafer, compared to the total number of potential chips on that wafer:
A larger chip can provide more functionality and performance, but is more likely to contain a manufacturing defect. Having larger chips reduces the overall wafer yield and increases cost.

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