Applications and demand for an IC chip formed with a silicon wafer are expected to increase, and further reduction in cost is required. An object of the invention is to provide a structure of an IC chip and a process capable of being produced at a lower cost. In view of the above described object, one feature of the invention is to provide the steps of forming a separation layer over an insulating substrate and forming a thin film integrated circuit having a semiconductor film of as an active region over the separation layer, wherein the thin film integrated circuit is not separated. In the case of using an insulating substrate, there is less limitation on the shape of the mother substrate when compared to a case of taking a chip out of a circular silicon wafer. Accordingly, reduction in cost of an IC chip can be achieved.