DAC
Digital-Analog Converter
A chip — or component of a larger chip — that converts a digital representation of an analog signal into an actual analog signal.
In phones, this most commonly refers to chips handling audio. The DAC is responsible for taking a stream of audio data in digital form and generating an accurate analog signal. That analog audio signal is then passed to speakers (headphones or a phone's loudspeaker(s)), via an amplifier circuit.
Better DACs can handle higher bit depths, higher bitrates, and higher sampling rates. These qualities can produce more accurate sound reproduction.
