Cache on cpu

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Reckoning

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The whole L1 cache, L2 cache thing just confuses be a bit, could someone enlighten me on the difference between them and what exactly cache is please?
Right now I have intel core 2 duo e6550 2.33 ghz
L1 data 2 x 32 KB
L1 inst 2 x 32 KB
L2 4MB
As far as I know cache memory is soldered on and you can not really buy more right? Is cache memory something to really look for while building a new computer or is this something you'd hardly notice and should focus more towards ram?
 
Simple

A CPU cache is a cache used by the CPU to reduce the average time to access memory. The cache is a smaller, faster memory which stores copies of the data from the most frequently used main memory locations. As long as most memory accesses are to cached memory locations, the average latency of memory accesses will be closer to the cache latency than to the latency of main memory.

And no, unless you are a wiz with nano technology and have a very very small soldering iron you can not upgrade cache memory as it is integrated into the CPU.

Your CPU is perfectly fine with 4mb of L2 Cache and most CPU's manufactured in a series such as Core 2 Duo or Quad have very similar Cache sizes. You will however see that the lower end of a line of CPU's somtimes has less cache than the flagship CPU with most of the mid range of the line having the same amount of cache. In todays advancment of CPU's and blazing memory speeds, cache still is an important factor however should not be your determining factor when purchasing a CPU as a large cache size for e-mailing and web browsing isnt going to make such an impact as with gaming or video rendering.
 
A larger CPU cache can positively affect gaming performance, so for gaming PCs, a CPU with more cache is always better. For a PC geared towards tasks like e-mail and music, it's not a very big deal.

Modern CPUs utilize multi-level caches, with smaller, faster caches at the lower levels and slower, larger caches at the higher levels. So as the CPU processes data, it combs through the caches level-by-level and if the data isn't found there, it fetches it from the RAM.
 
L1 and L2 caches are found in every modern CPU and some also utilize L3 caches. L4 caches are also found in server-class CPUs like Intel's Itanium range (Hondo series only).
 
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