Why Should Decoupling Capacitors Be Placed Close to the IC?

You've probably seen this PCB layout guideline: place decoupling capacitors as close to the IC's power pins as possible.

But why does the distance matter?

When an IC draws a sudden burst of current, the decoupling capacitor helps supply that transient current locally. If the connection is too long, parasitic inductance can limit how quickly current flows, contributing to voltage fluctuations at the IC's power pins.

That's why placement isn't just about the distance between the capacitor and the power pin. The entire path matters — from the power pin through the capacitor and back to ground. Short connections, a small loop area, and a low-inductance ground connection all help improve decoupling performance.

In practice, a capacitor placed close to the IC isn't necessarily well placed if its ground connection takes a long route or adds unnecessary vias.

When routing a PCB, it's worth looking at the complete current loop, not just the distance between two components.

Curious how others approach decoupling capacitor placement in their layouts.