|Fig. 1: Litz wire with 8 strands. (Source: Wikimedia Commons)|
The term "Litz wire" is derived from the German word "Litzendraht" meaning woven wire. It is constructed of individually insulated magnet wires either twisted or braided into a uniform pattern, as shown in Fig. 1. The twisting pattern is designed to equalize the duration each individual strand of wire spends on the outside of the conductor. Unlike in the simple twisted-strand hookup wire case, the insulations on individual strands force current to be carried equally and evenly along the whole conductor. This reduces the skin effect loss in the conductor, allowing the wires to be used at high frequency up to about 1 MHz. 
Skin effect is a phenomenon where alternating current (AC) distributes itself along a conductor such that most of the current is crowded on the outer conductor, closer to the surface, leaving the inner conductor not utilized. The name "skin effect" comes from the fact that at the extreme end when the frequency is very high, most of the current in the conductor will only flow in a very thin layer on the surface, aka skin, of the material. The depth in which this AC flows inside the conductor is called "skin depth." It can be shown that this "skin depth" is inversely proportional to a square root of frequency.  Since the resistance of a conductor is also inversely proportional to the area cross section of the material, having high frequency alternating current instead of DC greatly increases the resistance of the conductor.
To solve this problem with the skin effect, Litz wire was invented. By employing very thin (less than a skin-depth) individually insulated conductors so that each individual strand does not suffer skin effect degradation, the small wires are then twisted into a bundle such that each wire spends the same amount of time in the middle and on the outside of the bundle. This creates multiple electrically identical routes for the electric to take, reducing the apparent resistance. 
Litz wire conductors are typically used in power applications in high frequencies (HF) ranging from tens of kilohertz to up to a few megahertz. Typical applications for Litz wire includes high frequency inductors and transformers, inverters, communication equipment, ultrasonic equipment, sonar equipment, television and radio equipment and induction heating equipment. With the newly immerged interest in wireless charging, inductive chargers, such as in Qi standard, is also another application for Litz wire.
Litz wire sizes are often expressed with two numbers, N and AWG, where N is the number of strands and AWG is the American Wire Gauge size of each strand. For example, a 45/33 wire will mean 45 strands of 33 AWG twisted together.
Since the skin effect is inversely proportional to a square root of frequency, for Litz wire to be effective at high frequencies, each strand just be roughly the same size as the skin depth at that frequency. For copper, skin depth at 10 kHz is 660 μm, at 100 kHz is 210 μm, at 1 MHz is 66 μm, and at 10 MHz is 21 μm. This is equivalent to a 22 AWG for 10 kHz, 32 AWG for 100 kHz, 42 AWG for 1 MHz, and 52 AWG for 10 MHz.
In reality, the smaller the wire gauge, the more expensive the Litz wire becomes and the harder to buy. A company such as New England Wire Technologies which specializes wires and cables only offers Litz wire up to 48 AWG which is designed for 1.4 MHz to 2.8 MHz operation. Not only that, when the wire size becomes this small, the thickness of insulation around each strand starts to become significant in comparison to the wire size, and we start to underutilize the cross section of the conductor. At the end of the spectrum when frequency is above 6 MHz, Litz wire no longer offers any benefits and solid core conductors are used once again. 
In conclusion, Litz wires are designed for applications requiring power conductors at high frequency such as induction heating and wireless chargers. By twisting together multiple strands of small insulated conductors, skin effect loss can be reduced. This; however, comes at a cost. With excess thickness from insulation, and extra wire length from the twisting action, Litz wire losses its advantage at above Megahertz frequency level.
© Kawin Surakitbovorn. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
 F. E. Terman, Radio Engineers' Handbook, (McGraw-Hill, 1943), p. 37.
 W. L. Weeks, Transmission and Distribution of Electrical Energy (Harper & Row, 1981), p. 38.