The Tom’s Hardware article is interesting, thanks. It makes the point that the price quoted may not include the full ‘cost of revenue’ for the product in that it might be the bare die price and not the tested and packaged part (yields from fabs aren’t 100% so extensive functional testing of every part adds cost). The article also notes that R&D costs aren’t included in that figure; the R&D for NVIDIA (and TSMC, Intel, AMD, etc) are what keep that exponential perf-per-dollar moving along.
For my own curiosity, I looked into current and past income statements for companies. Today, NVIDIA’s latest balance sheet for the fiscal year ending 1/31/2024 has $61B in revenue, 17B for cost of revenue (that would include the die cost, as well as testing and packaging), R&D of 9B, and a total operating income of 33B. AMD for their fiscal year ending 12/31/2023 had $23B revenue, 12B cost of revenue, 6B R&D, and 0.4B operating income. Certainly NVIDIA is making more profit, but the original author and wikipedia picked the AMD RX 7600 as the 2023 price-performance leader and there isn’t much room in AMD’s income statement to lower those prices. While NVIDIA could cut their revenue in half and still make a profit in 2023, in 2022 their profit was 4B on 27B in revenue. FWIW, Goodyear Tire, selected by me ‘randomly’ as an example of a company making a product with lower technology innovation year-to-year, had 20B revenue for the most recent year, 17B cost of revenue, and no R&D expense. So if we someday plateau silicon technology (even if ASI can help us build transistors smaller than atoms, the plank length is out there at some point), then maybe silicon companies will start cutting costs down to bare manufacturing costs. As a last study, the wikipedia page on FLOPS cited the Pentium Pro from Intel as part of the 1997 perf-per-dollar system. For 1997, Intel reported 25B in revenues, 10B cost of sales (die, testing, packaging, etc), 2B in R&D, and an operating income of 10B; so it was spending a decent amount on R&D too in order to stay on the Moore’s law curve.
I agree with Foyle’s point that even with successful AGI alignment the socioeconomic implications are huge, but that’s a discussion for another day...
I think it is also good to consider that it’s the good-but-not-great hardware that has the best price-performance at any given point in time. The newest and best chips will always have a price premium. The chips one generation ago will be comparatively much cheaper per unit of performance. This has been generally true since I’ve started recording this kind of information.
As I think I mentioned in another comment, I didn’t mention Moore’s law at all because it has relatively little to do with the price-performance trend. It certainly is easy to end up with a superexponential trend when you have an (economic) exponential trend inside a (technological) exponential trend, but as other commenters point out, the economic term itself is probably superexponential, meaning we shouldn’t be surprised to see price-performance to fall more quickly than exponential even without exponential progress in chip speed.
The Tom’s Hardware article is interesting, thanks. It makes the point that the price quoted may not include the full ‘cost of revenue’ for the product in that it might be the bare die price and not the tested and packaged part (yields from fabs aren’t 100% so extensive functional testing of every part adds cost). The article also notes that R&D costs aren’t included in that figure; the R&D for NVIDIA (and TSMC, Intel, AMD, etc) are what keep that exponential perf-per-dollar moving along.
For my own curiosity, I looked into current and past income statements for companies. Today, NVIDIA’s latest balance sheet for the fiscal year ending 1/31/2024 has $61B in revenue, 17B for cost of revenue (that would include the die cost, as well as testing and packaging), R&D of 9B, and a total operating income of 33B. AMD for their fiscal year ending 12/31/2023 had $23B revenue, 12B cost of revenue, 6B R&D, and 0.4B operating income. Certainly NVIDIA is making more profit, but the original author and wikipedia picked the AMD RX 7600 as the 2023 price-performance leader and there isn’t much room in AMD’s income statement to lower those prices. While NVIDIA could cut their revenue in half and still make a profit in 2023, in 2022 their profit was 4B on 27B in revenue. FWIW, Goodyear Tire, selected by me ‘randomly’ as an example of a company making a product with lower technology innovation year-to-year, had 20B revenue for the most recent year, 17B cost of revenue, and no R&D expense. So if we someday plateau silicon technology (even if ASI can help us build transistors smaller than atoms, the plank length is out there at some point), then maybe silicon companies will start cutting costs down to bare manufacturing costs. As a last study, the wikipedia page on FLOPS cited the Pentium Pro from Intel as part of the 1997 perf-per-dollar system. For 1997, Intel reported 25B in revenues, 10B cost of sales (die, testing, packaging, etc), 2B in R&D, and an operating income of 10B; so it was spending a decent amount on R&D too in order to stay on the Moore’s law curve.
I agree with Foyle’s point that even with successful AGI alignment the socioeconomic implications are huge, but that’s a discussion for another day...
I think it is also good to consider that it’s the good-but-not-great hardware that has the best price-performance at any given point in time. The newest and best chips will always have a price premium. The chips one generation ago will be comparatively much cheaper per unit of performance. This has been generally true since I’ve started recording this kind of information.
As I think I mentioned in another comment, I didn’t mention Moore’s law at all because it has relatively little to do with the price-performance trend. It certainly is easy to end up with a superexponential trend when you have an (economic) exponential trend inside a (technological) exponential trend, but as other commenters point out, the economic term itself is probably superexponential, meaning we shouldn’t be surprised to see price-performance to fall more quickly than exponential even without exponential progress in chip speed.