Once IBM began using integrated circuits to build computers, the development was market driven. Economic incentives encourage producers to crowd more and more components on each integrated circuit. If you double the number of components, the speed of an integrated circuit approximately doubles, and at the same time the production cost increases by less than two. While the details on the mask become smaller and smaller, the number of masking, etching and building steps stays constant. However, as the number of components increase the capital costs to build new fabrication plants increases. The empirical rate of growth of electronic components on an integrated circuit is known as Moore's Law. From 1960 to 1972 the number of components on an integrated circuit doubled each year. From 1972 to the present and perhaps until the year 2000 the number of components on an integrated circuit will double every 18 months. In l977 it was possible to place 250,000 electronic components on a integrated circuit and by the year 2000 it may be possible to place 1 billion components on a integrated circuit.
The use of electronic components has increased 2000 times from 1960 to 1977 and is still increasing. A rule of thumb is that costs fall 20 to 30%with each doubling of output. For example, the production cost of the four function electronic calculator fell from $100to $5while at the same time the general price level of all goods more than doubled. As a student, you need to distinguish between (1) the decline in cost when the number of components is doubled and (2) the decline in cost when output is doubled. For example, when technology moved from a 256K memory to the 1M memory, the number of components increased by 4, but the cost of producing 1M memory integrated circuits was less than 4 times the cost of producing 256k memory integrated circuits. When the output of 1M devices increased by 2, the cost of 1M devices fell by 20 to 30%as efficiencies in production were obtained. Consequently, the fall in cost of a bit of memory has been greater the 30%per year since 1960. This falling cost can be attributed to both cost effects.
The physical limit to the number of components per integrated circuit is temporarily limited by the resolution distance of light. Using X or Gamma rays it is physically possible to pack even more components per integrated circuit. Ultimately, the physical limit is determined by the number of atoms required to construct a circuit. The economic limit is determined by the success rate in production. As more and more components are packed into the integrated circuit the failure rate goes up. One cause of such increasing failures is dust particles in the air. To reduce the possibility of contamination, integrated circuits are made in specially constructed clean rooms which filter out dust. To reduce the dust even more people are being removed from the production process through automation. Currently, and for the foreseeable future, the economic limit rather than the physical limit will control the number of components which can be placed on an integrated circuit.