Solution:

Local oxidation of silicon i.e. Loco's method is used to isolate devices from each other electrically. In modern cos chip design, millions of transistors are integrated into a single chip.

Locos is accomplished by growing a relatively thick layer of $\mathrm{SiO}_2$ in between each active device The regions between these thick $\mathrm{SiO}_2$ layers where transistors are built are called active regions of the Substrate.

Thermal oxidation of the Silicon (Locos) technique is based on the principle of selectively growing field oxides in certain regions.

It is achieved by shielding the active areas with silicon nitride $\left(\mathrm{Si}_3 \mathrm{NL}\right)$ during oxidation which effectively inhibits the oxide growth.

From the figure, it is seen that the field oxide forms a lateral extension under the nitride layer called the bird's beak region.

The encroachment of field oxide in the active region reduces the area available to form a transistor and therefore it limits device scaling and device density in VLSI cuts.