Moore's law and the economics of semiconductor price trends

International Journal of Technology, Policy and Management

Volumn 3, Issue 2, 2003, Pages 127-141

  Flamm, Kenneth ^a  

^a UNIVERSITY OF TEXAS AT AUSTIN   (United States)

Author keywords

Industrial organisation; Innovation; Prices; R D; Semiconductors

Indexed keywords

COSTS; ELECTRONICS INDUSTRY; INDUSTRIAL ECONOMICS; INTEGRATED CIRCUITS; JOB ANALYSIS; PRODUCTIVITY; RESEARCH AND DEVELOPMENT MANAGEMENT;

INDUSTRIAL ORGANIZATION; INNOVATIONS; MOORE'S LAW; SEMICONDUCTORS INDUSTRY;

SEMICONDUCTOR DEVICES;

EID: 2142813007     PISSN: 14684322     EISSN: None     Source Type: Journal    
DOI: 10.1504/IJTPM.2003.003885     Document Type: Article

References (37)

1. I am grateful for useful conversations about some of the ideas in this paper with Alan Allen, Denis Fandel, Dale Jorgenson, Paul Landler, Bill Spencer, and Phillip Webre. Responsibility for the errors is mine alone.
2. Jorgenson, D. (2001) 'Information technology and the US economy,' American Economic Review, Vol. 91, No. 1, March.
3. Author's calculations based on data from World Semiconductor Trade Statistics, Annual Consumption Survey, 2000.
4. Triplett, J.E. (1996) 'High-tech productivity and hedonic price indexes,' in Organization for Economic Cooperation and Development, Industry Productivity, Paris, OECD.
5. Flamm, K. (1989) 'Technological advance and costs: computers vs. communications,' in R.C. Crandall and K. Flamm (Eds.) Changing the Rules: Technological Change, International Competition, and Regulation in Communications, Washington, Brookings.
6. Aizcorbe, A., Flamm, K. and Khurshid, A. (2001) The Role of Semiconductor Inputs in IT Hardware Price Declines: Computers vs. Communications, December.
7. Moore, G.E. (1965) 'Cramming more components onto integrated circuits', Electronics, Vol. 38, No. 8, 10 April.
8. Moore [7] notes that the silicon wafers then in use were "usually an inch or more in diameter,' with 'ample room for such a structure if the components can be closely packed with no space wasted for interconnection". He notes that this density "can be achieved by present optical techniques and does not require the more exotic techniques, such as electron beam operations, which are being studied to make even smaller structures".
9. Moore, G.E. (1975) 'Progress in digital integrated circuits,' Proceedings of the 1975 International Electron Devices Meeting, pp.11-13.
10. For a more comprehensive discussion of IC manufacturing and cost structures, see [11].
11. Flamm, K. (1993) 'Measurement of DRAM prices: technology and market structure', in Foss, M.F. Manser, M.E. and Young, A.H. (Ed.) Price Measurements and Their Uses, Chicago, University of Chicago Press.
12. Over the 1983-1998 period, one estimate is that overall wafer processing cost per square centimeter of silicon increased at a compound annual growth rate of 5.5%. See [13].
13. Cunningham, C., Fandel, D., Landler, P. and Wright, R. (2000) 'Silicon productivity trends,' International SEMATECH Technology Transfer No. 00013875A-ENG, 29 February, p.5. Note that this estimate is per total silicon area processed, not cost per good yielded area. Since good yielded area appears to have increased over time as a fraction of total wafer area processed, with improved processing yields, it seems safe to assume that wafer processing cost per good, yielded silicon area was roughly constant over time.
14. For solid evidence that DRAM yields have increased steadily over time, for successive generations of DRAMs, see [15,160].
15. Stapper, C.H. and Rosner, R.J. (1995) 'Integrated circuit yield management and yield analysis: development and implementation,' IEEE Transactions on Semiconductor Manufacturing, Vol. 8, No. 2, May, p.100.
16. Cholewa, R. (1996) '16M DRAM manufacturing cooperation IBM/SIEMENS in Corbeil Essonnes in France', Proceedings of the 1996 IEEE/SEMI Advanced Semiconductor Manufacturing Conference, p.222.
17. Flamm, K. (1997) More For Less: The Economic Impact of Semiconductors, San Jose; Semiconductor Industry Association, December, Appendix 2.
18. Aizcorbe, A. Corrado, C. and Doms, M. (2000) 'Constructing price and quantity indexes for high technology goods', presented at the National Bureau of Economic Research Summer Institute, July 26.
19. One calculates a factor of 1.37 based on chip area for first versions of six generations of DRAMs. The increase in size is calculated from the data shown in Figure 6.2 in Prince [20, p.209] A similar estimate is implicit in Cunningham et al. [13, p.11] who estimate that area/bit has fallen at a rate of 29% annually over a long period. That works out to an increase in chip size of 41 % with every three-year quadrupling in bits per DRAM.
20. Prince, B. (1991) Semiconductor Memories: a Handbook of Design, Manufacture and Application, 2nd Ed., Chichester, UK, John Wiley and Sons.
21. I.e. chip size increased by about 1.4 rather than 2, for about a 30% reduction in chip size relative to that predicted by lithography alone.
22. The methodology used for producing the price indexes cited in Flamm [171 takes weighted averages of 'matched model' DRAM chip market prices from one period to the next, with the weights calculated from market revenue shares for each model according to the so-called 'Fisher ideal' index number formula. It does not use any information on price per bit or any other direct calculation of price per electronic element or function. Interestingly, though not a perfect correlation, the Fisher ideal price index and a simple calculation of average price per aggregate bit shipped for all generations of chips produced at any moment are a close match over time. See Flamm ([23] pp.10, 238-239).
23. Flamm, K. (1996) Mismanaged Trade? Strategic Policy and the Semiconductor Industry, Washington, Brookings Institution, Ch. 2.
24. Sigurdson, J. Industry and State Partnership in Japan: The Very Large Scale Integrated Circuits (VLSI) Project, Lund, Sweden, Research Policy Institute, for detailed discussions of the Japanese VLSI projects and their impact.
25. Fransman, M. (1992) The Market and Beyond: Cooperation and Competition in Information Technology Development in the Japanese System, Cambridge, Cambridge University Press.
26. Good resources on the history of SEMATECH are SEMATECH's own web pages, Available from: www.SEMATECH.org, and the corporate chronology contained within [27-30]
27. Spencer, W.I. and Grindley, P. (1993) 'SEMATECH after five years: high technology consortia and U.S. competitiveness', California Management Review, Vol. 35.
28. Grindley, P., Mowery, D.C. and Silverman, B. (1994) 'SEMATECH and collaborative research: lessons in the design of a high-technology consortia', Journal of Policy Analysis and Management, Vol. 13.
29. Browning, L.D. and Shetler, J.C. (2000) SEMATECH, Saving the U.S. Semiconductor Industry, College Station, Texas A&M Press.
30. Horrigan, J.B. (1996) 'Cooperation among competitors in research consortia,' unpublished Doctoral Dissertation, University of Texas at Austin, December.
31. Semiconductor Industry Association (1994) The National Technology Roadmap for Semiconductors, San Jose: Semiconductor Industry Association.
32. Semiconductor Industry Association (1997) The National Technology Roadmap for Semiconductors, Technology Needs, San Jose, Semiconductor Industry Association.
33. The existence of the National Cooperative Research Act of 1984, which granted partial antitrust exemption to registered US R&D consortia - like SEMATECH, the operational home for the US roadmap - undoubtedly played an important role in making this roadmap coordination process feasible for the industry.
34. It is claimed that prior to its internationalisation, the SEMATECH membership never accounted for less than 75% of US semiconductor industry sales [29, p.197].
35. Flamm, K. (1996) 'Japan's new semiconductor technology programs,' Asia Technology Information Program Report No. ATIP 96.091, Tokyo, November.
36. They may be accessed through a link found at the International SEMATECH web site, at www.sematech.org.
37. According to the 2000 International Technology Roadmap.