Intelligent Machines

The High Cost of Upholding Moore's Law

  • by Christopher Mims
  • April 20, 2010
  • GlobalFoundries’ multibillion-dollar Fab 1 in Dresden, Germany, creates chips with feature sizes of 45 nanometers or less.

A new leading-edge microchip fabrication facility, or fab, costs $3 billion to $5 billion to build. The high capital cost means that fabs must keep their production lines running at full capacity in order to pay back the money sunk into them. “The most expensive thing on the planet is a half-empty fab,” says Brian Krzanich, general manager of Intel’s manufacturing and supply chain. Consequently, only the highest-volume processor manufacturers–such as Samsung and Intel–are still sole owners and operators of state-of-the-art plants.

Other chip makers either produce lower-performance chips using older, less expensive techniques or outsource manufacturing to companies that specialize in operating semiconductor plants, such as GlobalFoundries (spun out of AMD last year) and the Taiwan Semiconductor Manufacturing Company. These foundries aggregate high-volume orders from multiple customers to keep production lines humming. GlobalFoundries, with more than $2 billion in annual revenue, expects to expand its annual production capability to 3.8 million wafers by 2014; each wafer will comprise hundreds of chips.

The most advanced mass-produced chips are made with integrated circuits whose smallest features are about 32 nanometers across. The next generation, with 28-­nanometer features, will arrive later this year, and 22- and 20-nanometer processors are “well down the path on development,” says Ana Hunter, Samsung’s vice president of foundry services in the United States. These smaller features mean that the constant gain in processor performance that has become familiar over the last 40 years can be expected to continue. Moore’s Law–the prediction that the number of transistors on a chip will double every 24 months–will hold true for at least the next few years.

This story is part of our May/June 2010 Issue
See the rest of the issue
Subscribe

But as the elements on a chip become smaller, designing processors is getting tougher. All this means that R&D costs are rapidly increasing. In 2009, around $30 billion, or 17 percent of revenue, went to R&D across the industry–a 40 percent increase over 1999. Fabs are getting more expensive as well; in 1999, a state-of-the-art fab cost roughly $2 billion.

DATA SHOT

22 nanometers
The size of the smallest features that can currently be used in integrated circuits. Chips made with 22-­nanometer technology should be on sale next year.

Chip makers are trying to contain costs with extensive collaborations. IBM, ­GlobalFoundries, STMicroelectronics, Toshiba, NEC, Infineon, and Samsung are all working together on developing high-volume manufacturing processes suitable for next-generation chips. Whether the shift toward multicustomer foundries and R&D cost-cutting will let Moore’s Law continue into the next decade, however, is anyone’s guess. In the end, the biggest limitation on silicon chip technology might not be the laws of physics but those of economics.

Tech Obsessive?
Become an Insider to get the story behind the story — and before anyone else.
Subscribe today

Uh oh–you've read all five of your free articles for this month.

Insider Premium

$179.95/yr US PRICE

More from Intelligent Machines

Artificial intelligence and robots are transforming how we work and live.

Want more award-winning journalism? Subscribe and become an Insider.

  • Insider Premium {! insider.prices.premium !}*

    {! insider.display.menuOptionsLabel !}

    Our award winning magazine, unlimited access to our story archive, special discounts to MIT Technology Review Events, and exclusive content.

    See details+

    What's Included

    Bimonthly home delivery and unlimited 24/7 access to MIT Technology Review’s website.

    The Download. Our daily newsletter of what's important in technology and innovation.

    Access to the Magazine archive. Over 24,000 articles going back to 1899 at your fingertips.

    Special Discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

    First Look. Exclusive early access to stories.

    Insider Conversations. Join in and ask questions as our editors talk to innovators from around the world.

  • Insider Plus {! insider.prices.plus !}* Best Value

    {! insider.display.menuOptionsLabel !}

    Everything included in Insider Basic, plus ad-free web experience, select discounts to partner offerings and MIT Technology Review events

    See details+

    What's Included

    Bimonthly home delivery and unlimited 24/7 access to MIT Technology Review’s website.

    The Download. Our daily newsletter of what's important in technology and innovation.

    Access to the Magazine archive. Over 24,000 articles going back to 1899 at your fingertips.

    Special Discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

  • Insider Basic {! insider.prices.basic !}*

    {! insider.display.menuOptionsLabel !}

    Six issues of our award winning magazine and daily delivery of The Download, our newsletter of what’s important in technology and innovation.

    See details+

    What's Included

    Bimonthly home delivery and unlimited 24/7 access to MIT Technology Review’s website.

    The Download. Our daily newsletter of what's important in technology and innovation.

You've read of free articles this month.