MOORE IS NO LONGER LESS SMALLER TRANSISTORS COST BIG MONEY
If the demise of Moore’s Law has been called a little p prematurely, one thing’s for sure: keeping it going is b becoming increasingly costly. For instance, Intel says it plans to spend $20 billion on a pair of 7nm fabrication units, colloquially known as fabs. Meanwhile, just one of TSMC’s latest 5nm manufacturing plants, known as fab 18, is said to have cost £17 billion. That’s big money.
Those huge costs are the major reason why the industry is consolidating down to just a few major players. The price of entering the game, let alone of maintaining some competitiveness, is incredibly prohibitive. Another intriguing indicator of just how resource-intensive chip manufacturing has become can be found in the example of ASML (Advanced Semiconductor Materials Lithography). A Dutch company founded in 1984, it specializes in the photolithography machines used by all the big players in chip production. If you want to knock out semiconductors using the latest EUV processes, you need an ASML machine.
But here’s the incredible bit. ASML’s role is so important, its market capitalization or overall value is now greater than Intel’s. So, the broader economics of chip manufacturing is changing fast—and not for the better. Taking TSMC as an example (it’s harder to make these judgments based on Intel because, until recently, it has only produced chips for itself and not acted as a foundry for third parties), consider its transition from 65nm to 28nm. The cost of a wafer went up from around $2,000 for 65nm to $3,000 for 28nm. However, because so many more chips can be produced on a 28nm wafer than an equivalent 65nm wafer, the price of individual chips dropped by two-thirds.
However, if you take TSMC’s more recent progression from 10nm to 7nm and then 5nm, wafer prices have ballooned from $6,000 to $17,000. The consequence is that chip prices have only shrunk by about 15 percent. The moral of the story is that if wafer prices keep going up, it won’t matter whether it’s technically possible to keep Moore’s Law alive. Nobody will be able to afford the chips, anyway.