Intel keeps driving Moore's Law---a theory that transistor density doubles every two years on an integrated circuit---but the company's investments in the effort may become questionable.
CNET News' Stephen Shankland noted the tug of war over Moore's Law and how Intel has repeatedly proven the naysayers wrong.
Moore's Law has long passed being mere prognostication. It's the marching order for a vast, well-funded industry with a record of overcoming naysayers' doubts. Researchers keep finding ways to maintain a tradition that two generations ago would have been science fiction: That computers will continue to get smaller even as they get more powerful.
To date, Intel has continued Moore's Law, rolled out a steady cadence of chips and carried a PC upgrade cycle on its back along with Microsoft. The issue is we're hitting a post-PC era and it's unclear whether Intel has the mobile chops. Intel should be given a round of applause for believing in manufacturing when few technology companies do, but there are economics to consider when it comes to Moore's Law.
The big question: At what point does Intel's massive research and development spending and capital expenses no longer make sense.
According to a few analysts, Intel is paying for the innovation of the chip industry and driving Moore's Law, but at some point there will be diminishing returns. Some analysts argue that Moore's Law diminishing returns are already here.
Simply put, it's unclear what the return on investment for Moore's Law will be years from now. After all, Intel will spend something slightly below $12.1 billion on capital expenditures in 2012. Intel also invested heavily in chip equipment maker ASML. Analysts noted that Intel had to invest in ASML because the tools needed to keep Moore's Law humming weren't in demand from other chip makers.
Piper Jaffray analyst Auguste Gus Richard handicapped Intel's recent developer forum and noted that the upcoming Haswell chip is already a has-been.
In a post-PC era, we believe CPU performance matters less and the ecosystem and differentiation matter more than ever. It appears, however, the company continue to believe things will be fine if they just build a better CPU. We believe the need for Intel to shift its business model has become obvious.
According to Richard, Intel's best move is to become a manufacturer for companies like Apple and Microsoft and buy intellectual property to supply the likes of Cisco too. Intel has been quietly buying intellectual property outside of its walls to make communications infrastructure.
The upshot is that chasing Moore's Law doesn't make as much sense now that the Wintel monopoly is eroding.
Not all analysts take the bear side of the equation.
Stifel Nicolaus analyst Kevin Cassidy said in a research note Oct. 2:
The bear case for Intel has the world firmly in a 'post-PC' era and that Moore's Law is over. We disagree with both points but importantly, we see that it would be Moore's Law that could drive the world to a 'post-PC' era. As a reminder, Moore's Law suggests the transistor density of an integrated circuit doubles approximately every 24 months. This is driven by reducing transistor sizes by 50% every 24 months. We believe process technology will increasingly become a key differentiator in the race for mobile processor dominance, which is a factor in Intel’s favor.