It's basically a computer with specialized hardware whose sole purpose is to mine Bitcoins, see http://www.butterflylabs.com/ for an example

Application Specific Integrated Circuit

in the bitcoin context they chips created for the specific purpose of hashing, allowing you to mine for bitcoins quickly and effficiently.

An ASIC is an application-specific integrated circuit. Basically, dedicated hardware like this: http://www.butterflylabs.com/

Here's an explanation:

http://cryptojunky.com/blog/2013/02/17/bitcoin-asic-roundup/

ASIC is an implementation of a circuit. They will be the fastest implementation of the logic, however they are the most expensive implementation of that logic by far.

Unlike FPGAs once logic is implemented in an ASIC the implementation is set in stone, so if there is a bug in the hardware fixing it will require producing an additional run and incur the expensive cost again.

The high cost is why FPGAs are popular for both prototyping and production units when possible as it is much cheaper for smaller quantities.

ASIC having exactly the logic necessary to target a task is why they are the most efficient at the task compared to general purpose hardware.

https://en.wikipedia.org/wiki/Application-specific_integrate...