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Moore’s Law is dead, long live Moore’s Law – part 1

Moore’s Law is dead, long live Moore’s Law – part 1
by Scotten Jones on 04-15-2015 at 10:00 pm
Categories: Foundries, TechInsights

April 19th is the fiftieth anniversary of Moore’s law! We thought it would be a good opportunity to reflect back on fifty years of Moore’s law, what it is, what it has meant to the industry, what the current status of the law is and what we may see in the future.

Moore’s law
Moore’s law is so well known that you wouldn’t think we would need to restate it, but the fact is that many people misunderstand and misstate the “law”. In Electronic Magazine on April 19, 1965 Gordon Moore wrote: “The complexity for minimum component costs has increased at a rate of roughly a factor of two per year”. This observation became known as Moore’s law.

Cramming more components onto integrated circuits
By Gordon E. Moore, Electronics, Volume 38, Number 8, April 19, 1965

At the ASMC last year, after one of the talks someone got up and said Moore’s law was a technology law but has now become an economics law. As you can see from the actual “law” it has always encompassed economics. I have seen people talk about transistors per unit of horizontal area and many other versions of the “law” that aren’t in keeping with what was originally said. Even Intel’s on-line museum doesn’t accurately quote what Moore said.

What I believe happened after Moore’s article was published is his observation became a benchmark for the industry. Companies realized that if the industry was following such a rapid integration and cost reduction path, that individual companies must follow the same path at the same rate or be left behind. This led to a kind of technological arms race that has endured to this day.

But Moore’s laws influence was even wider than just driving manufacturing costs and pricing. Exponentially increasing component counts and exponentially decreasing costs have resulted in the system you couldn’t build last year “because it was too complex and too costly”, becoming possible, then affordable and finally widely used in just a few short years. When Moore wrote his article many of the products we take for granted today didn’t even exist, for example personal computers, tablets and cell phones to name just a few. All of these products only became possible because of integration and cost reduction.

The resulting new products have driven incredible growth in semiconductor revenue from less than $1 billion dollars in 1960 to approximately $10 billion dollars in 1978, over $100 billion dollars in 1994 and over $350 billion dollars in 2014. When Moore’s law finally ends it has huge implications for the entire semiconductor industry and electronics industries the semiconductor industry supports.

Moore’s law in Action
In case you are wondering what Moore’s law has looked like for the semiconductor industry, figure 1 illustrates the price trends for a variety of products.

Figure 1 includes several data series:
[LIST=1]

  • Worldwide prices for one million transistors. This is calculated by taking the worldwide semiconductor revenue and dividing it by the estimated transistors produced per year.
  • Intel price per million instructions per second of microprocessor power. This is likely the measure on the graph subject to the most error in interpretation. For many years we have estimated the processing power of Intel processes in millions of instruction per second (MIPS). There was time when Intel directly reported this number but then over time we have had to correlate against a series of new benchmarks. In the last few years we have abandoned this effort but there is still a lot of historical data. The price we pick each year is the processor with the lowest price per MIP based on Intel’s published price list.
  • Price per megabit of memory for DRAM and NAND Flash. This is simply the worldwide revenue for each memory type divided by the worldwide bits produced.
  • A trend line with a 35% per year reduction in price.

    Figure 1. Price per function trend. Source, IC Knowledge.

    As you can see from the figure, since 1980 transistors, DRAM and Intel processor prices have all followed the 35% per year price reduction closely meaning prices have actually dropped more than in half every two years! It is hard to see in the figure but for 2013 DRAM prices per megabit actually went up and then in 2014 returned to roughly the same places they were in 2012. Although this is reflective of improved pricing power for the DRAM manufacturers, it also coincides with issues in continued DRAM cost reduction that will be discussed in a later article in this series.

    It is also interesting to note that initially NAND Flash prices fell much faster than the 35% reduction seen for other products, although since around 2008 NAND prices reductions have begun to moderate and more closely follow the 35% trend. This graph and analysis are based on price trends but what about manufacturing costs? Price and manufacturing costs are related by the following:

    Price = Manufacturing Cost + Gross Margin

    Examining our data on gross margins we see flat to slightly increased gross margin over the last several decades meaning that manufacturing cost must be declining at least as fast as prices. In the next installment of this series we will examine manufacturing and see how this incredible cost reduction has been accomplished. We will then examine the history, current status and future prospects of Moore’s law for DRAM, Flash and Logic.

    Also read:
    Moore’s Law is dead, long live Moore’s Law – part 2
    Moore’s Law is dead, long live Moore’s Law – part 3
    Moore’s Law is dead, long live Moore’s Law – part 4
    Moore’s Law is dead, long live Moore’s Law – part 5

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