Moore's Second Law Hits Home

Moore's Second Law is that as chip density increases exponentially, the cost to set up manufacturing also increases exponentially.

This is the sad flip side of Moore's Law, the exponential force behind high tech progress. Complexity comes at a price.

For many years companies like Intel and TI fought this Law, which they both knew well, by keeping engineers front-and-center, and by running the organization as lean as possible. That meant giving short-shrift to explaining what new chips could do, marketing them mainly in bulk to a few key OEM customers.

But times changed. Intel in particular wanted to move "up the value chain," creating sub-systems, even whole systems. And it grew bureaucratically to do just that.

Trouble was it didn't watch its flank, those big customers it had spent its corporate liftime pleasing. AMD started making chips which that ran Windows, that ran cooler, that even ran faster by dividing the work into multiple mini-chips or "cores." Today AMD has 26% of the server chip market.

So Paul Otellini, who took over a year ago, the first Intel CEO ever to come from somewhere other than engineering, is having to bite the bullet. This month he will lay off 10,000 people, according to News.Com, most of them salesmen marketers. He had already dumped 1,000 managers and sold-off some of those sub-system businesses.

Thus Moore's Second bites. As the chips grow, so does the ship needed to make them. A bigger ship is harder to turn. The minor problems Otellini thought he had turned out to be major rot.

But if Intel is going to get back to basics, is Otellini the man to lead them there?

Moore's Second has yet to really bite Paul Otellini.