Microchips are doing more and more with less and less. A recent sample:

Sanyo – “…microchip combines functions of earphone and microphone. Chip reproduces sounds from the eardrum.”

http://www.engadgetmobile.com/2006/10/11/sanyo-developing-earphone-lsi-chip-that-doubles-as-a-microphone/

Hewlett-Packard – “Memory Spot Chip – a miniature wireless data chip, the size of a grain of rice…could be stuck on or embedded in almost any object and make available information and content now found mostly on electronic devices or the Internet.”

http://www.hp.com/hpinfo/newsroom/press/2006/060717a.html

SmartPill – “SmartPill has received approval by the Food and Drug Administration to be marketed in the United States. The electronic pill is meant to be ingested by a patient; it then gathers information about the digestive system as it travels through it, transmitting the information to a receiver worn by the patient.”

http://www.technologyreview.com/read_article.aspx?id=17470&ch=biotech

Glasgow University Digital Retina – “The device would contain an imaging detector with hundreds of pixels coupled to an array of microscopic stimulating electrodes…If light forms an image on the detector, then the result will be electrical stimulation of the retina in the shape of this image. The stimulated cells then send the information via the optic nerve to the brain. The imaging part of the system is based on the technology used in any digital camera.” The prototype of the implant has 100 pixels, but the researchers hope to increase this as their work progresses. “Around 500 pixels would allow people to walk down the street and recognise faces,” Dr Mathieson said.”

http://news.scotsman.com/health.cfm?id=1013292006