<electronics, humour> A substance trapped inside {integrated circuit} packages that enables them to function (also called "blue smoke"; this is similar to the archaic "phlogiston" hypothesis about combustion). Its existence is demonstrated by what happens when a chip burns up - the magic smoke gets let out, so it doesn't work any more. See Electing a Pope, smoke test. Usenetter Jay Maynard tells the following story: "Once, while hacking on a dedicated Zilog Z80 system, I was testing code by blowing EPROMs and plugging them in the system, then seeing what happened. One time, I plugged one in backward. I only discovered that *after* I realised that Intel didn't put power-on lights under the quartz windows on the tops of their EPROMs - the die was glowing white-hot. Amazingly, the EPROM worked fine after I erased it, filled it full of zeros, then erased it again. For all I know, it's still in service. Of course, this is because the magic smoke didn't get let out." Compare the original phrasing of Murphy's Law. [Jargon File] (1995-01-25)

The stuff inside expensive electric things that you can smell if you accidentally zorch them on a dry winter day. Once you let it out, that thing will never work again.
I touched my Palm Pilot after shuffling across the rug, and I think I let out the magic smoke because now it doesn't work.

Magic smoke (also factory smoke, blue smoke, or the genie) is a humorous name for the caustic smoke produced by severe electrical over-stress of electronic circuits or components, causing overheating and an accompanying release of smoke. The smoke typically smells of burning plastic and other chemicals.