"As we make things smaller, the effort that it takes to make them actually work is increasingly difficult," Holt said. "There are just more steps and each one of those steps needs additional effort to optimize."
To compensate for the challenges in scaling, Intel has relied on new tools and innovations.
"What has become the solution to this is innovation. Not just simple scaling as it was the first 20 years or so, but each time now you go through a new generation, you have to do something or add something to enable that scaling or that improvement to go on," Holt said.
Intel has the most advanced manufacturing technology in the industry today, and was the first to implement many new factories. Intel added strained silicon on the 90-nanometer and 65-nanometer processes, which improved transistor performance, and then added gate-oxide material -- also called high-k metal gate -- on the 45-nm and 32-nm processes.
Intel changed transistor structure into 3D form on the 22-nm process to continue shrinking chips. The latest 22-nm chips have transistors placed on top of each other, giving it a 3D design, rather than next to each other, which was the case in previous manufacturing technologies.
Intel in the past has made chips for itself, but in the last two years has opened up its manufacturing facilities to make chips on a limited basis for companies like Altera, Achronix, Tabula and Netronome. Last week Intel appointed former manufacturing chief Brian Krzanich to CEO, sending a signal that it may try to monetize its factories by taking on larger chip-making contracts. Apple's name has been floated around as one of Intel's possible customers.
For Intel, the advances in manufacturing also correlate to the company's market needs. With the PC market weakening, Intel has made the release of power-efficient Atom chips for tablets and smartphones based on the newest manufacturing technologies a priority. Intel is expected to start shipping Atom chips made using the 22-nm process later this year, followed up by chips made using the 14-nm process next year.
Intel this week said upcoming 22-nanometer Atom chips based on a new architecture called Silvermont will be up to three times faster and five times more power-efficient than predecessors made using the older 32-nm process. The Atom chips include Bay Trail, which will be used in tablets later this year; Avoton for servers; and Merrifield, due next year, for smartphones. Intel is trying to catch up with ARM, whose processors are used in most smartphones and tablets today.
The process of scaling down chip sizes will require lots of ideas, many of which are taking shape in university research being funded by chip makers and semiconductor industry associations, Holt said. Some of the ideas revolve around new transistor structures and also materials to replace traditional silicon.
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