San Diego Venture Group's Venture Summit 2014, with guest speaker Ron Reedy.

1. The End of Moore’s Law
Or, “Peak Oil Transistors”

2. Semiconductor Business Basics
Hi, I’m Ron and I’m a CMOS-aholic

3. Semiconductors 101
 In 2013 the entire, worldwide semiconductor industry achieved about
$300B in revenues and ~4% growth
 Walmart achieved $466B, or 50% more
 Semi OI = 10-15%; Walmart OI = 3-4%
 China had twice the growth rate
 Oil industry was about $10T
 New fabrication plants, “fabs,” cost about $5B and only a handful of
companies can even consider owning one
 In 1973, a new mask aligner cost about 1 MY (~$35k)
 Today, an EUV stepper costs about 1,000 MY (~$100M)
 State-of-art chips using these technologies require thousands of design
engineers
 And about 2X as many software engineers
 A modern chip costs about $100M to develop, plus ramp-up costs
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4. Multiplier Effect of Semi’s
 Semiconductor $
content of most
systems is 2-20%
• System revenue
>>10X system cost
 Total leveraged
impact is ~>10T$
 Half of this driven by
10 companies!
 Comparable to the oil
industry
 Inherently the
backbone of any
information system
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5. Similarities to Oil Industry, i.e., a Mature Industry
 Majors dominate
production and revenues
 Efficiency, scale and access to
capital are crucial
 The “easy oil” elephant fields
have been found
 We are in a broad peak
 Wildcatters (start-ups) find
new opportunities
 Lots of dry holes
 Looking for a gusher
 Deploy fracking
 Niche opportunities are the
most defensible (WD40)
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6. What’s Wrong with this Picture?
 There is >$10T of
profitable value
created by
semiconductors
 Driven by $3T of
profitable electronic
systems
 All supported by
$0.3T of transistors
worth 20% less every
year (Moore’s Law)
 So does this look
stable?
$10T
$3T
$0.3T
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7. History of Moore’s Law
1.E+00
1.E+01
1.E+02
1.E+03
1.E+04
1.E+05
1.E+06
1.E+07
1.E+08
1.E+09
1.E+10
1.E+11
1960 1970 1980 1990 2000 2010 2020
RelativeUnits
Transistors/chip
Transistor/$
Fab cost
The party’s over!
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8. Peak Transistors (per $)
 Speed of Intel μP’s peaked in 2004
 28 nm will be the cheapest node
according to:
 Broadcom
 Global Foundries
 nVidia
 ST Micro
 ASML
 And that’s 2/3 of Moore’s Law in the
history books
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9. What Moore’s Law Really Says
 The number of transistors has grown from 1 (which
won a Nobel Prize) to 2 (another Nobel Prize) to
almost 100 B
 Steam engines and miles of rail grew about 9-10
orders of magnitude, then collapsed by an order of
magnitude with introduction of new technologies
 Moore’s Law is now in uncharted territory
 i.e., it is over
 We have been addicted to ever cheaper transistors
for 50 years
 ~20 generations
 11 orders of magnitude (100,000,000,000 X)
 This is about equal to 5% money supply growth since
Columbus discovered the Americas (~1500)
 What does this portend?
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10. Crossing the Rubicon: Transistor Costs
are Rising
 So what is the impact of each successive node increasing in
cost by 10-30%?
 Compare this to the original 4X cost reduction per node (~3Y)
 It will require “EUV,” a euphemism for soft XRAY, lithography
 The difficulty and cost of this development is why Cymer was acquired
 The electronics industry is addicted to rapid declines in
transistor costs and short replacement cycles
 “Have you seen the new whizbangmatron at Fry’s?,” followed by
 “I can’t wait ‘til those are less than $1,000”
 Combined, these market responses create a volume-driven
virtuous cycle, all of which is based on declining transistor costs
 IC cost has overwhelmed other inflationary pressures
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11. Potential Implications
 World GDP
 If electronics systems drive $10T/Y in total turnover, or about 20% of
world GDP, then flat IC-derived revenues causes 1% lower GDP
growth
 About 50% of all IC’s are shipped into China for product assembly,
so half of the total $ impact will fall on China
 Could reduce China’s GDP growth to that of a developed country
 Geopolitical
 America won the Cold War and the post-Soviet competition largely
with Si-based technology (GPS, smart weapons, consumerism, etc.)
 What if our lead stagnates, or even shrinks? (Satchel Paige: “Don’t look
back; something might be gaining on you”)
 What else changes now that we cannot rely on cheaper transistors?
 Is this the equivalent of the “peak oil” concept?
 We’ve seen massive changes in world economics as the “easy oil”
era passed into history ($2.50/bbl, before the ‘72 oil embargo)
 Is there an equivalent to fracking that changes things (for a while)?
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12. Potential Implications, II
 Entrepreneurism
 Gotta love it! All problems are opportunities
 Entrepreneurs require dislocations (ask the mammals, or Gordon Moore
himself)
 Research & Development
 New ways to deliver enhanced performance per transistor
 “The Cloud” reuses centralized computer assets instead of billions of
discrete platforms
 “The network is the computer,” Sun Micro
 More efficient use of transistors
 Cell phones subsumed the following:
 GPS, MP3/DVD player, still camera, movie camera, calculator,
dictaphone, landline, encyclopedia, wristwatch, alarm clock, timer,
personal computer, flashlight, routers, etc
 Is there any new technology that can extend the Si growth curve?
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13. Conclusions
The primary attribute of Moore’s Law,
exponentially cheaper transistors, is no
longer in effect
We can see it happening but its impact will
become obvious over the next 3-5 years
This change will affect everything we do
Options:
Enjoy it while it lasts
Dig a hole and insert your head
Develop and deploy follow-on alternatives
Adapt to a world of “peak transistors”
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14. Thank You
 Ron Reedy
 A personal perspective