Do you like your iPhone?
Today, you are walking with the equivalent of what was a supercomputer not too long ago — in your pocket.
You’re probably reading this on your smartphone right now, aren’t you?
If there’s one trend that’s driving every other trend, it’s the drive to be small.
All the emerging trends in powerful mobile computing, augmented and virtual reality and artificial intelligence hinge on what Intel co-founder Gordon Moore first described 51 years ago.
Moore noticed an interesting trend back in 1965. Over time, the amount of transistors you could pack on a piece of silicon was going up, while the cost per transistor was going down.
Approximately every two years or so, improvements in semiconductor manufacturing technology meant that we could double the amount of computing elements on a chip. The more elements, the more powerful the chip. And the more powerful the chip, the more you could do with it.
Importantly, these faster chips were getting cheaper too.
And that’s how it’s been ever since.
Gordon Moore nailed one of the most important technological trends of the past half-century. This trend has supported or enabled every major technological change we’ve enjoyed over this period of time.
Our entertainment and communications were transformed by cheap and ubiquitous computing power. We ditched the cathode ray tube television set and went with high-resolution flat screens thanks to semiconductor technology. And it wasn’t all that long ago that we lacked smartphones and PCs, with all of their potential to deliver media content to us.
This trend has helped improve our health. Cures to age-old diseases have been found thanks to more powerful silicon chips. These chips can be used to help sequence the human genome and model the activity of human cells.
Even older industries like energy have been completely transformed. The price you pay at the pump would be far higher if geologists and oil companies couldn’t precisely sense and model what a formation underground looks like… this requires high-performance computing.
But we’re hitting limits with how small we can make these different components.
In fact, over the past several years, it’s become harder and harder to shrink the manufacturing process.
But it isn’t going to be the end of improvement in processing power.
In fact, the smartphone you buy in 2025 is going to be more powerful than a professional workstation you might be using today. Not only more powerful in terms of processing power but also in terms of memory.
Plus, just as we’ve seen for decades, you’ll get more bang for your buck.
The market demands more memory, and faster memory. That’s you. You want to have lots of browser tabs open, listen to music and have the ability to run AR and VR applications. You also want enough storage to keep all your pictures, songs and files safely and conveniently stored.
And you probably want to be able to do it in something small enough to carry in your pocket.
Big Data needs fast storage. Even with more powerful processors, you aren’t going to get very far if you can’t access data on a hard drive fast enough. It becomes a bottleneck.
The market keeps growing. Demand for computer chips keeps going up, be it for microprocessors, memory or storage. All the big trends you’ve heard about, from Big Data to the Internet of Things to the continued growth in the smartphone and AR/VR market… all of them are driving demand for more equipment to build out their electronic guts.
Plus, there’s more than growth in this industry: These chip companies are always in a race to keep up with Moore’s law, making it a self-fulfilling prophecy. The one that doesn’t manage gets left in the dust by the rest of the pack.
That means they are always in need of upgrades. Whenever semiconductor manufacturers need to shrink their process, they need to buy the equipment to do it. That makes select companies who can supply chip foundries with the latest and greatest fabrication technology very attractive right now.
To a bright future,
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This story originally appeared in the Daily Reckoning