How the Information Revolution Remade Business and the Economy

Apek Mulay

• Publisher: Business Expert Press
• Year: 2016
• ISBN:
  9781631575907
• Topic: Economics
• Subtopic: Macroeconomics
• Index: Economics

Tremendous technological progress in the last half century has exponentially grown productivity as well as increased automation to reduce the costs of operation for businesses. On one hand, ever-growing productivity has reduced requirements for manual labor through automation. But, on other hand, huge unemployment created from reduction of workforce due to automaÂtion, has reduced the consumer purchasing power and is indirectly hurting the Return on Investments (RoI). This brings any further progress of technology to a standstill. For technology to progress both supply and demand have to grow. The supply comes from producÂtivity of workforce and demand comes from their wages. Hence, free markets must ensure that wages automatically catch up with ever-growing productivity, with minimal government inÂtervention. To avoid automation from destroying jobs in an economy, free markets should ensure that working hours of workforce be reduced during the waning phase of economy and increased during its waxing phase.

CHAPTER 1

The Magic of Moore’s Law on Knowledge-based Economy

Introduction

The benefits of Moore’s law to human progress can be traced to a universal value an end user in form of transistors. The more the number of transistors on an electronic circuitry, the greater is the functionality of the product the consumers can buy. In this way, the number of transistors translates into system functionality. Therefore, by cramming more transistors on an integrated circuit (IC), it is possible to not only add value to the final product but, by means of mass production, to also ­minimize or reduce the costs of production. In this way, Moore’s law has been able to offer a lot of value to the semiconductor industry by offering a higher value to consumers and at the same time reducing the costs for the manufacturers. Thereby, it has contributed to every new innovation in the consumer electronics and provided a profitable business model for the semiconductor industry.

A Brief History of Technological Developments in Economy Preventing Demise of Moore’s Law

Moore’s law has served as an important benchmark for the development of microelectronics and information processing during the last five ­decades. During these five decades, the technical requirements of optimal chip manufacturing costs have been extended to include the processor performance, economics of computing, as well as economic development of society. The 50 years of progress of the semiconductor industry based on the progress of Moore’s law has been associated with rapid changes in information processing technologies. A rapid growth in chip complexity accompanied by “cramming more components onto integrated circuits” has rapidly increased the productivity, processing speed, etc. through the introduction of innovations contributing to the rapid growth of the knowledge-based economy.

In his 1965 paper, Gordon Moore notes that the total cost of making a particular system function must be minimized. One way of achieving this would be to mass-produce the chips so that the engineering costs could be amortized over many identical chips. Another way would be to develop flexible design techniques that could be used for many different chips. In other words, the design focus has to be either on making high volumes of a single function or on making designs that could be reused for many different chips. The approach to focus the design on making high volumes of a single function resulted in the exponential growth of the memory market. The invention of the microprocessor combined the benefits of both high-volume manufacturing and reuse of design work in high-volume multifunctional chips. As the universal microprocessors made the application developers pay for most of the design costs, the costs of semiconductor manufacturing dropped radically as much of the difficulty and cost of designing complex systems was off-loaded to system and software designers. The development of the calculator and the advent of semiconductor memory devices in the mid-1960s helped generate more demand for semiconductor products, sustaining the progress of Moore’s law during that decade.

The period from 1950 to 1970 is considered to be a golden era of free market capitalism in the United States because during these decades the wages of the workforce caught up with the productivity of the workforce. Hence, it was not surprising that the ICs introduced during the period 1959 to 1975 followed the predicted trend of Moore’s law as per his 1965 paper relatively well. In 1975, Intel introduced its first general purpose 8080 processor that started the personal computer (PC) revolution. The macroeconomic changes that happened in the U.S. economy after 1970, especially after 1980, shifted the focus of the economy to supply-side economics, and the United States lost the golden era of free market capitalism. As a result of macroeconomic policies enacted during the tenure of Ronald ­Reagan’s presidency, a major economic crisis hit in 1984–1985, and since then, macroeconomic policies have resulted in boom-and-bust cycles that have plagued the global economy to date. Preparing for the rapid expansion of markets, Intel Inc. licensed the 80286 microprocessor to other manufacturers, including AMD, Fujitsu, Siemens, and IBM. There was a big boom in 1983, which continued into the middle of 1984—and then the semiconductor world collapsed in late 1984 and 1985. The resulting crisis caused Intel to lay off its workforce and shut down several factories. Hence a policy of merely giving tax cuts to businesses does not revive the economy but may hurt it further when businesses have to lay off their workforce, and the consequences observed in 1984–85 of Reagan’s 1981 tax cuts is evidence of the same.

In the mid-1980s, just when no one seemed to be able to make a profit, the IBM PC and Microsoft saved the day. After the great economic crisis of 1987, China’s economy also opened up, and the United States started offshoring manufacturing to China as Japan’s economy crashed in 1989 because of the Plaza Accord. Since the Intel 80286 processors that were shipped in 1982, microprocessors have utilized parallel processing in many alternative forms. By parallelism, more operations can be ­accomplished within a time unit. Since the mid-1990s, microprocessor architectures have increasingly relied on program compilers that detect and optimize parallelism in the source code programs. Indeed, the innovations in compiler technology have been a main driver in processing power improvements and not just the cramming of components on the IC. However, the development of software that compiled computer programs into machine code started to add to the growth in productivity. Thus in the mid-1990s, the Internet and World Wide Web (WWW) exploded the hard disk and memory market and created the need for new processor architectures (that were able to handle images, sound, and video), which helped sustain the progress of Moore’s law. However, as a result of the focus of the economy only on the supply side since the 1980s, there was a major economic crisis at the threshold of the new millennium.

During the last four decades, the microprocessor architectures have changed considerably. Starting with Intel’s 486 processor series, so-called cache memory began to be included on the same silicon die as the processor. Processor chips, therefore, became a combination of processors and memory. As memory chips have a considerably higher density of transistors than microprocessor chips, this combination of memory with processors led to a rapid increase in the number of transistors on such integrated processor chips. Since late 1999, Intel has not included transistor counts in its processor summaries. In October 1999, Intel Pentium III Xeon and Mobile Pentium III processors had some 28 million transistors. In July 2001, Pentium 4 had about 42 million transistors. Most of these transistors were cache memory. In this way, the transistor counts on microprocessors have increased very rapidly because they have closed their earlier gap with memory chips. Indeed, it seems that Intel is again in the memory business. This is how the progress of Moore’s law has been cramming more and more components on an IC. However, this growth has been unsustainable, and eventually, in 2008, the subprime crisis due to the focus on supply-side economics nearly collapsed the U.S. economy.

After the subprime crisis of 2008, the global demand for smartphones has been driving the growth of the semiconductor industry and the progress of Moore’s law. While the demand for laptops and PCs has started to slow down, there has been an exponential growth in smartphones around the globe. While Original Equipment Manufacturers (OEMs) like Apple Inc. have become very cash rich with the exploding growth of smartphones, countries like India have been running huge trade deficits owing to the absence of any domestically manufactured smartphones to cater to the need of its ever-growing population. In addition, there has been a decrease in demand for Intel Processors due to reduced demand for PCs and laptops, but there has been a rise in the demand for ARM processors to be used in smartphones. This has also forced Intel Inc. to open manufacturing even to its competitors in order to let them use Intel’s excess manufacturing capacity, and Intel Inc. has been going on an acquisition spree to compete in the wireless business.

During its history, the semiconductor industry has often hit the speed limit for continuing the technological progress of Moore’s law. The invention of the digital clock and the calculator helped sustain the progress of Moore’s law in mid-1960s. The mini- and mainframe computer industry helped sustain the progress of Moore’s law during the 1970s. As mentioned before, in the mid-1980s, just when no one seemed to be able to make a profit, the IBM PC and Microsoft saved the day. Similarly, It was the advent of Internet and WWW which exploded the hard disk and memory market. This invention created a demand for new processor architectures that were able to handle images, sound and video. Since the millennium, the explosion in demand for cell phones and smartphones has helped ­sustain the progress of Moore’s law. Today, the resulting economic disparity resulting from the focus of macroeconomic policies on supply-side economics has resulted in a failure of central bank policies in stimulating domestic economic demand. This has created another stock market bubble not only in the U.S. economy but in the global economy. Now, the semiconductor industry is banking on the Internet of Things (IoT) to generate the next wave of demand. Hence, for Moore’s law to be able to continue benefitting the global economy and usher in an IoT revolution, the focus should be to raise the economic demand in proportion to the supply of the number of transistors, and future chapters will envision how to make it possible through free market economic policies.

The Virtuous Cycle of Semiconductor Industry

As clearly stated in the executive summary of International Technology Roadmap for Semiconductors (ITRS), “a basic premise of the Roadmap has been that continued scaling of electronics would further reduce the cost per function and promote market-growth for integrated circuits.” Since the observation made by Gordon Moore as early as 1965 until today, the semiconductor industry has made use of Moore’s law as a guide to its progress. Hence, the technological roadmap of ITRS can be traced back to 1965, when Gordon Moore made an observation that the number of transistors would keep on growing exponentially on an IC.

When the number of components such as transistors, bits, etc. on an IC increases, the total chip size has to be contained within practical and affordable limits. In today’s ICs, the typical size of DRAM is less than 145 sq. mm., and the typical size of a microprocessor unit (MPU) is ­approximately 310 sq. mm. This can be achieved by a continuous downscaling of the critical dimensions in an IC. Moore’s law could be expressed as a linear shrink of dimensions by a factor of 0.7 every 2 years, where “critical dimension” is understood as “half pitch,” as defined in the ITRS roadmap for semiconductors.

This growth in the supply of transistors has greatly enhanced the productivity of modern ICs and consumer electronics. Today, approximately 3 billion people carry smartphones in their pockets. Each of the handheld smartphones is more powerful than a room-size supercomputer from the 1980s or even the computers needed to launch Apollo 11 to the Moon in 1969. As a rule of thumb, when smaller transistors are more tightly packed on an IC, there is a boost to performance of the chip and a reduction in its cost. An example of performance gains achieved by the semiconductor industry can be understood from the fact that today’s Intel Skylake processor contains around 1.75 billion transistors. ­Approximately half a million of these would fit inside a single transistor of Intel 4004 MPU in 1971. The presence of half a million transistors also delivers 400,000 times as much computing power as a single transistor in 1971.

As the performance and productivity of ICs started to grow, the ­supply of consumer electronics with higher performance also started to grow. There was always a rising consumer demand for advanced electronic gadgets, and that kept the demand for consumer electronics high enough to call for further investments to drive the progress of Moore’s law. Thus, the supply of goods called for more demand and thereby kept the virtuous cycle of the semiconductor industry sustaining the progress of Moore’s law. While the consumers benefited from the advancements in the latest and greatest electronic gadgets, the producers benefited from the consumption of manufactured electronics, thereby keeping this economic cycle of supply driving demand and demand further driving more supply in constant motion. This became the virtuous cycle of the semiconductor industry leading to the establishment of a knowledge-based economy.

The virtuous cycle of semiconductors exists because of the better performance-to-cost ratio of products, which has resulted in an exponential growth of the semiconductor market. The predictability of a good ­Return on Investments (RoI) resulted in a high degree of confidence shared by different semiconductor industry players that enabled the progress of Moore’s law and brought the much expected benefits for the semiconductor industry.

Progress of Other Industries Related to Semiconductor Industry

The continued progress of Moore’s law has resulted in a lot of investments in the economy. The progress of the semiconductor manufacturing process involves not just physics but also chemistry of different chemicals that would be used in the semiconductor manufacturing process. Besides, consumer electronics started finding applications in day-to-day use for consumers, which are not restricted to the use of automobiles, aircrafts, home appliances, kitchenware, etc. Along with an exponential growth of various applications making use of semiconductors, there was also an exponential growth of the demand for ICs. In this way, progress of the semiconductor industry resulting from the continuous progress of Moore’s law has also resulted in the growth of other industries catering to the progress of today’s knowledge-based economy. Thus did the semiconductor industry become a principal driver for the economic growth of high tech and innovation.

The last 50 years of rapid progress of Moore’s law ushered in the third industrial revolution, also known as the “Digital Revolution,” in the global economy. The progress of the semiconductor industry led to the adoption and proliferation of digital computers and digital record keeping that continues till date. It was the spectacular progress of the semiconductor industry driven by the progress of Moore’s law that resulted in the beginning of the Information Age. It would not have been possible to achieve the third industrial revolution without mass production and widespread use of technologies like computer, digital cellular phone, and Internet based on digital logic circuits. The rapid growth in the number of cell phone users worldwide is evidence of the magic of Moore’s law. The number of cell phone users grew from 11.2 million in 1980 to cross the 4-billion mark by 2010. Also, the number of Internet users grew from 2.8 million in 1990 to 1.8 billion users by 2010. This rapid growth in the number of users connected through the spread of Internet is leading to the fourth industrial revolution in the form of IoT. Thus, the progress of Moore’s law led to the development of transmission technologies like computer networking, the Internet, and digital broadcasting, which also led to an exponential growth and social penetration of 3G phones along with new consumer electronic gadgets providing ubiquitous entertainment, communications, and online connectivity. The present progress toward 4G and 5G penetration is only possible as long as consumer demand keeps growing in the global economy in order to sustain a demand for more technological advancements.

Socioeconomic Impact Resulting From the Progress of Moore’s Law

As Moore’s law started to progress on the physical front, it resulted in mass production of consumer electronics, which made them affordable. Thus, things that were once considered to be a luxury became a necessity because of rapid technological progress, which resulted from the progress of Moore’s law. This progress led to the birth of a knowledge-based economy, resulting in greater interconnectedness, easier communication, and exposure to a vast amount of information that in the past could be easily suppressed by totalita...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Foreword
• Preface
• Acknowledgments
• Chapter 1 The Magic of Moore’s Law on Knowledge Based Economy
• Chapter 2 Return on Investments with Moore’s Law
• Chapter 3 Impact of Moore’s Law on the transformation of Chinese Semiconductor Industry
• Chapter 4 International Technology Roadmap for Semiconductors
• Chapter 5 Fabless Versus Integrated Device Manufacturer
• Chapter 6 Drivers proposed by ITRS for More than More-than-Moore and Beyond CMOS
• Chapter 7 Sustaining progress of More than Moore and Beyond CMOS with Mass Capitalism
• Chapter 8 Measurement of the progress for More-than-Moore and Beyond CMOS
• Chapter 9 Mass Capitalism’s Minimum Necessities and Maximum Amenities for driving growth of More-than-Moore and Beyond CMOS
• Chapter 10 Increasing Broader Economic Prosperity by driving Economic Demand of Consumer Electronics with progress of More-than-Moore and Beyond CMOS
• Chapter 11 Mass Capitalism and Fourth Industrial Revolution with More-than-Moore and Beyond CMOS
• Appendix
• Index