Peter Cochrane's Blog: When will the wheels come off the silicon chip cycle?

Chip feature sizes as tiny as common viruses - but what's the endgame?

The chip and integrated circuit sector is the latest industry to follow the trend towards the concentration of resources  and suppliers

The chip and integrated circuit sector is the latest industry to follow the trend towards the concentration of resources and suppliersPhoto: Shutterstock

Written on BA 904 flying London to Frankfurt and dispatched to later the same week via a public wi-fi connection at 34Mbps.

In the early stages of the industrial revolution, every town and village had a blacksmith and an iron foundry. Design, manufacture and support also started as local activities but then much later became geographically concentrated by specialisation and to be closer to production lines.

Farm machinery and automobiles originated in thousands of small manufacturing shops across Europe and the US. Later, radio sets and TVs enjoyed similar distributed origins. But these products were crude, unreliable and expensive, and the invention of the production line and quality control resulted in centralisation and huge improvements in products, their supply and support.

Over the decades, production lines have been honed and improved. Competition has ensured the innovators survive and the laggards fall by the wayside. The net result is that now all our basic commodities are produced by a handful of suppliers, while numerous system integrators satisfy our desire for good design and customisation.

It is the system integrators that assemble our cars and electronic goods from standard components produced by a handful of specialised plants. Typically, there are no more than five to 10 major suppliers of, say, batteries, LCD displays, keyboards, internal combustion engines, or electrical and transmission systems.

So far there seems to be some immutable law that says big is beautiful - with concentrations of resources doing a better job, more efficiently, than any distributed option we have so far come up with. This law holds true for power generation, food production and city living. All do far more for far less than distributed alternatives.

And, in the struggle to provide more to growing numbers of people using fewer and fewer materials, concentration still seems to be the only viable option.

The latest industry to follow this trend is the chip and integrated circuit sector, with foundries and production facilities now costing over $2bn to set up. Here the exponential pace of processor innovation has reduced chip feature sizes from...