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.
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.
As they develop their competitive strategies, semiconductor companies must: