How Moore's Law Works

­In 1975, Moore wrote a paper for the Institute of Electrical and Electronics Engineers (IEEE) International Electron Devices Meeting. He titled the paper "Progress in digital integrated electronics." Moore acknowledged that his prediction for the rate of advancements in circuit technology had held true and discussed the possibility of the trend continuing.

Moore pointed out that as techniques improved, the potential for defects decreased. That meant circuit manufacturers could work with larger wafers and produce more chips per wafer. Production continued to become more efficient, which in turn helped drive innovation to create even smaller components.

Moore said the trend he predicted 10 years earlier would progress at that same rate for at least a few more years. But Moore also said that he believed the semiconductor industry was approaching the limit for some techniques, such as conserving space on a circuit. He called this factor "circuit cleverness." He believed that we'd reach a limit on how clever we could arrange components -- eventually we'd have the optimal use of space. Once that factor is removed from the equation, the rate of advancements must slow down. He said he believed after a few years components would double only every 24 months.

While Moore's original observation focused on technological advances and the economics behind producing circuits, many people reduce his observation to the simple statement we call Moore's Law. The most common version of Moore's Law is that the number of transistors on a circuit doubles every 18 (or 24) months. Remarkably, this prediction has held true -- today, Intel's Core i7 microprocessor has 731 million transistors, while its Xeon processor has 1.9 billion transistors [source: Intel].

Cramming more components on an integrated circuit doesn't just mean devices are becoming more powerful -- it also means they're getting smaller. The tiny components on compact integrated circuits power all sorts of portable electronic devices. Even a small microprocessor chip today is as powerful as a full-sized chip was a few years ago. The advances in circuit production make devices like smartphones and netbooks possible.