Temperature regulation of a processor is a very critical issue. Generally, the faster a CMOS (Complimentary Metal Oxide Semiconductor - a specific way of manufacturing transistors/chips) processor is clocked, the more power it draws. The more power it draws, the more waste heat it produces. The hotter the device gets, the higher the internal resistance, the more heat is produced (see the vicious cycle?)
There are several basic mechanisms for cooling a processor (or any chip for that matter):
(1) ambient air - the surface area of the chip touching both the room-temperature air combined with the heat being absorbed and distributed by the circuit board. This works well for low-power devices which aren't clocked especially quickly.
(2) radiated ambient air - this is basically a chunk of metal (usually aluminium) which absorbs the heat from the chip by direct contact and has a lot of surface area in which to dissipate the heat to the air. This is often used in conjunction with a fan.
(3) forced air - a fan either blows across the entire board, or is mounted directly to the chip.
(4) liquid cooling - here's where you get serious (and more costly) - a pump circulates a coolant over the chip and from the chip the heat picked up in the liquid is radiated out to the atmosphere. The basic components are the heat exchanger (radiator - usually a series of thin copper or aluminum plates), a pump, and the heat pick-up coil which sits on top of the chip.
(5) liquid cooling part two - instead of using a "normal" liquid to circulate, a compressed gas (such a nitrogen) is compressed into a liquid form and either sprayed or circulated over the offending part. This is typically only used for very, very high end experimental processors as it is pretty expensive to run continuously.
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