A Sigma Delta DAC is entirely digital. It is a variation of the interpolating DAC just discussed, but the increase in sampling rate is much larger. Also, the data stream from the interpolation filter passes to an additional stage, a S-D (Sigma-Delta) modulator. This modulator shifts the quantization noise to HF (it effectively acts as an LPF to the signal but an HPF to the quantization noise), and is then truncated to 1-bit to drive a 1-bit DAC (which, is simply a changeover switch) connected to equal positive and negative reference voltages. The output is filtered in an external analog LPF. In theory a S-D DAC is perfectly linear and has very low noise. S-D DACs are the optimum choice for a large number of low price, medium to high quality reconstruction DAC applications.