Moore ... or less?
December 26, 2017
Semiconductor companies can keep pace with Moore’s Law. The question is whether they should.
Semiconductor companies have achieved profitable growth by doubling the number of transistors on integrated circuits every two years. Today, costs associated with creating ultra-dense transistors are rising exponentially. At the same time, sales prices are flat—or declining.
In this high-cost/low-return environment, it’s harder for semiconductor companies to justify using Moore’s Law as a tool for sustained competitiveness. Winners will no longer pursue innovations simply because they can. They will pursue opportunities that are clearly aligned to a viable business strategy, as well as their growth and profitability objectives.
Key findings
Today, there is no guarantee that the rewards associated with advanced chip development outweigh the costs.
- Technology vs. supply: The market for 10 nanometers (nm) and smaller process technologies is expected to grow from $14.8 billion in 2020 to $39 billion in 2025. But many customers don’t need to transition to ultra-dense nodes to maintain competitiveness. Nodes of 28nm and higher will have remarkable staying power.
- Growth vs. profitability: Design costs for newer nodes have grown by 1300 percent from 65nm to 10nm. Today, the two-year projected average cost per thousand gates of 20nm and 16nm technology nodes are actually higher than the 28nm cost.
- Quality vs. cost: The requirements for manufacturing advanced nodes have more than doubled since 2005. This has increased exposure to quality incidents by nearly 500 percent.
Recommendations
As they develop their competitive strategies, semiconductor companies must:
Choose carefully
Understand the costs, benefits and requirements of becoming an advanced node leader. A diverse product portfolio comprising traditional and advanced node technologies is likely the best strategy.
Leverage design cycles
Generate as much value as possible from existing investments. Continue producing older nodes for existing applications—and develop new applications for older nodes.
Be more vigilant
With advanced data analytics, establish four lines of defense to detect quality issues earlier in the product lifecycle. That shift produces significant savings.
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