Short answer
Designers and engineers should anticipate and leverage the continuous cost reductions and quality improvements inherent in semiconductor technology to inform product lifecycle planning and pricing strategies.
- Field
- Innovation & Markets
- Source
- National Bureau of Economic Research (2018)
- Method
- Econometric analysis and historical data review
- Evidence
- Strong effect
The continuous, periodic reduction in size and cost of electronic circuit elements, as described by Moore's Law, has historically led to an average annual decline of 20-30% in the cost of manufacturing transistors. This innovation & markets research insight is drawn from a 2018 study published in National Bureau of Economic Research. Using Econometric analysis and historical data review, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Designers and engineers should anticipate and leverage the continuous cost reductions and quality improvements inherent in semiconductor technology to inform product lifecycle planning and pricing strategies.
Moore's Law Drives 20-30% Annual Cost Reduction in Semiconductor Manufacturing
The continuous, periodic reduction in size and cost of electronic circuit elements, as described by Moore's Law, has historically led to an average annual decline of 20-30% in the cost of manufacturing transistors.
National Bureau of Economic Research · 2018
Key Findings
- 01Moore's Law has historically driven a 20-30% annual decline in the cost of manufacturing a transistor.
- 02Smaller feature sizes in electronic circuits offer additional economic value beyond cost reduction.
- 03Measuring semiconductor product prices requires quality adjustment methods due to these additional benefits.
Application
Design takeaway
Designers and engineers should anticipate and leverage the continuous cost reductions and quality improvements inherent in semiconductor technology to inform product lifecycle planning and pricing strategies.
How to apply
When designing electronic products, factor in the expected cost decrease of core components over the product's lifecycle to optimize pricing and profitability.
Project actions
- 01When researching components for a design project, look for trends in cost reduction over time.
- 02Consider how the 'quality' of a component (e.g., speed, size, efficiency) impacts its value and price.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Provides quantitative evidence for the economic impact of Moore's Law.
- +Connects technological trends to economic principles.
Limitations
The rate of technological advancement can vary, and external market factors can influence component prices.
Reliability & validity
The study relies on historical economic data and established indexes, suggesting good reliability. Validity is supported by the long-standing observation and acceptance of Moore's Law within the industry.
Think critically
How might the slowing of Moore's Law impact future product development and pricing strategies in the electronics industry?
Design Principles
"Embrace iterative technological advancement to drive down costs and enhance product value."
Understanding the economic drivers behind technological advancement is crucial for forecasting market trends and planning product roadmaps. This insight highlights the power of incremental innovation in driving down production costs, which can significantly impact product pricing and market accessibility.
What This Means for Your Design
Moore's Law means that computer chips get cheaper and better every year, which helps companies make things for less money and sell them for a good price.
How to use in your project
- 1.Reference this research when discussing the economic feasibility of using advanced electronic components in your design project.
- 2.Use the cost reduction figures to justify the potential for future affordability of your product.
Add to My Project
Quick Cite
Paragraph starter
The principles of Moore's Law suggest a historical trend of significant annual cost reduction (20-30%) in semiconductor manufacturing, alongside improvements in component quality. This predictable evolution of technology can inform design decisions by allowing for the anticipation of lower component costs and enhanced performance over a product's lifecycle, thereby influencing pricing strategies and market competitiveness.
Source
National Bureau of Economic Research
Measuring Moore’s Law: Evidence from Price, Cost, and Quality Indexes
journal · 2018
View sourceQuestions About This Research
- What does the research say about moore's law drives 20-30% annual cost reduction in semiconductor manufacturing?
- Designers and engineers should anticipate and leverage the continuous cost reductions and quality improvements inherent in semiconductor technology to inform product lifecycle planning and pricing strategies. Evidence: National Bureau of Economic Research (2018).
- Why does "Moore's Law Drives 20-30% Annual Cost Reduction in Semiconductor Manufacturing" matter for design?
- Understanding the economic drivers behind technological advancement is crucial for forecasting market trends and planning product roadmaps. This insight highlights the power of incremental innovation in driving down production costs, which can significantly impact product pricing and market accessibility.
- How can designers apply this research?
- Designers and engineers should anticipate and leverage the continuous cost reductions and quality improvements inherent in semiconductor technology to inform product lifecycle planning and pricing strategies.
- What were the main findings?
- Moore's Law has historically driven a 20-30% annual decline in the cost of manufacturing a transistor.. Smaller feature sizes in electronic circuits offer additional economic value beyond cost reduction.. Measuring semiconductor product prices requires quality adjustment methods due to these additional benefits.
- What research method was used?
- Econometric analysis and historical data review.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2018 journal from National Bureau of Economic Research.
- What should I do differently in my next project?
- When designing electronic products, factor in the expected cost decrease of core components over the product's lifecycle to optimize pricing and profitability.
- What are the limitations?
- The study focuses on historical trends and may not fully predict future deviations from Moore's Law.