When The Chips Are Down And Prices Go Up
And you thought toilet paper shortages were bad in the beginning of the coronavirus pandemic, or board and plywood prices are high and getting insane at the local hardware depot that you already spent too much money at. The laws of supply and demand – and the resiliency of the global economy – are going to be severely stress tested by the semiconductor shortage.
An eventual rise in chip costs is expected due to the slowdown in rate of shrinkage in chip transistor sizes – and therefore the proportional lowering in the cost of the transistors – that is happening as Moore’s Law runs out of gas, in large part due to the very small sizes of these transistors relative to the size of a copper or silicon atom but also driven by the increasing costs of extreme ultraviolet (EUV) lithography equipment and the number of steps it takes to etch a chip using EUV techniques.
To put it bluntly, chips were always going to get more expensive on their own, even if enough fabs could be built to ensure supply. That’s what the aging of Moore’s Law – the old man ain’t dead just quite yet – means. If the transistors can’t get smaller – they already can’t get faster thanks to the death of Dennard Scaling a decade ago – then the chips will have to get bigger and hotter eventually, and a larger chip has inherently higher costs because getting a known good part out of any given area decreases as the chips get larger. Yields are by necessity lower on bigger chips. Which is why you will see the industry eventually embrace chiplet architectures, first in 2D and then in 3D configurations. We have no choice.
