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Conventional wires become very lossy at high frequencies.

Is this because of the skin effect?

Plasmon based computer chips, since plasmons can support much higher frequencies (~100 THz range).

Aren't free electron oscillations in a metal plasmons. What is the difference and why can they support such high optical frequencies?

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Here a disambiguation is necessary:

  • Plasmons (or Bulk Plasmons) are collective excitation of electrons in a medium and affect the propagation of waves in the medium itself. If you want more details just ask.

  • Surface Plasmons are collective excitation of surface eletrons and have a very different dispersion relation from bulk plasmons (again, if you need details, just ask). There is a lot of studies going on on them, because it's easy to excite them with optical frequencies on metal interfaces.

So, for the creation of computer chips based on plasmonics, one usually refers to Surface Plasmons, which for metals like Silver, Gold, etc. have resonant peaks in the optical region. The other cool feature is that thay are able to confine light in "hot spots" of subwavelength dimensions, therefore the idea is to use the very high optical frequencies typical of photonics, without loosing the miniaturization typical of electronic based circuits.

Back to your questions:

At optical frequencies traditional metals become less and less perfect conductors, so that absorption is responsible for the loss of significant portion of the injected power. If you want, the less perfect the conductor, the more the fields penetrate the conductors. This is a very "natural" thing, at sufficiently high frequency everything is transparent.

The plasmons themselves suffer from the same problem: because of the high absorption of the metal at the frequencies they are excited, they can propagate for short distances before being damped out, the range can vary a lot, but we are in the interval 10-100 microns. So the goal, as said above, is to have plasmonic devices on the nanometer scale.

For what concerns why they can support such high optical frequencies, well the plasmon "happen" just at those frequencies, because they are normal modes of the metal surface. If you hit it with the right light source in the right way (again, for more details just ask) then you see the excitation, if you send RF you don't see them.

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