The term 'singularity' applied to intelligent machines refers to the idea that when intelligent machines can design intelligent machines smarter than themselves, it will cause an exponential growth in machine intelligence leading to a singularity of infinite (or at least extremely large) intelligence. Belief in this idea is based on a naive understanding of what intelligence is. As an analogy, imagine we had a computer that could design new computers (chips, systems, and software) faster than itself. Would such a computer lead to infinitely fast computers or even computers that were faster than anything humans could ever build? No. It might accelerate the rate of improvements for a while, but in the end there are limits to how big and fast computers can run. We would end up in the same place; we'd just get there a bit faster. There would be no singularity.
http://www.singularity.com/