Paul C
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> Further, it is possible for moral depreciation to be associated
> in practice with an increase in the value of the means of
> production necessary to stay in production. This is certainly
> the case with semiconductors. New generations of chip fab lines
> depreciate the old ones before they are worn out, and are at
> the same time much more expensive than the old ones.
Allin C
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Isn't this a case of economies of scale? The new chip fab lines
may be more expensive than the old ones -- but surely they are
not more expensive on a per-chip basis? (Or if so, this is
associated with a more than proportionate increase in the
functionality of the chips.) No?
Paul C
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Yes it is a case of economies of scale, but in a rather peculiar
sense. As one goes to produce products whose dimensions become
smaller than the wavelength of visible light, then the difficulties
of doing so go up. Equipment that relies upon UV light to perform
lithography is much more expensive than equipment that relies upon
visible light. The issue is one of the shrinking physical scale
of the product. The fact that the product - transistors - becomes
smaller, means that more can be produced on a chip, and thus that
these higher costs of capital equipment still translate into
a lower cost per transistor.
The point is though, that preexisting factories become devalued
when the feature size shrinks. You just can not produce a Pentium Pro
on a fab line with 1 micron feature sizes. The old plant therefore
becomes almost useless.