I think many people interested in technology are familiar with Moore's law.
It's basically the observation that the number of transistors that can be fitted on chips doubles about every two years. This density of transisters per square millimeter is related to the process size, for example the latest generation of high end CPUs and GPUs are using 7 nanometer technology, with 5 nm in development.
The assumption or perhaps implied implication of Moore's Law is that you would expect that this means the price per transistor would be proportionally getting less. For every square millimeter of silicon wafer you have, you are over time able to make more and more transistors on there. It was as if Moore's Law was a proxy for the price per transistor.
You could be forgiven for thinking that it means that year after year for a given amount of money you can buy an ever more powerful computer. I previously thought that was what it meant in practice.
However shinking the process size has slowly been getting more and more expensive to do. This has been the case since 28 nm. Since then the price per transistor has been going up for smaller and smaller process sizes. Let that sink in for a moment, the price per transistor has been going up, not down.
So for a 7nm chip, with more transistors, and with a higher price per transistor, it is no wonder newer CPUs and GPUs are costing more. And add to that some inflation happening in the economy as well as some supply chain issues due to COVID, it's no wonder that various products are seeing some pretty high prices at the moment.
Also it's worth trying to appreciate the supply side. One of the main suppliers is TSMC, based in Taiwan. There are fewer and fewer fabrication facilities for the smaller and smaller process sizes as the required investment increases. There are constraints on finding large enough areas of industrial land with ready access to the large amounts of water and electricity, this requires years of planning with consultation with government to have these facilities.
With fewer places able to make the newer process size chips, obviously supply is an issue. There is more fagility with fewer suppliers. https://en.wikipedia.org/wiki/Antifragility This makes the production sensitive to any stressors/failures leading to high volitility. And there have been stressors in the form of COVID and also crypto mining demand.
Intel announced recently that they will create a new plant in Arizona:
It will probably be several years until it will be able to produce anything, but they did this with consultation and cooperation from the Arizona government and also the Biden administration. It's a $20 billion dollar investment that will help provide production security for the US and US companies like Intel, Nvidia and Apple.
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