Those were excellent replies, thank you. I've heard of computer power doubling every 18 months but I'd never known what physical process itself was being doubled. Srbanator
This is all going to be an oversimplification: The most typical physical process tends to be making thinner lasers.
The most basic unit of a CPU is the transistor. A transistor is an electrical component that will not conduct electricity until it reaches a certain point, and then it will let electricity through without any resistance. Its a 0 when theres little or no charge, and a 1 when theres a small charge. The CPU's are a thin layer of a semi-conductor that is cut up into tiny rectangles that form a transistor. This is what a CPU looks like magnified to the nanometer scale:
They only need to make them small enough to be an independant, noncontiguous section. The easiest way to accomplish this is to be able to have lasers that that cut and etch the processor with thinner transistors that leave less of a gap or "wasted space" between them.
While the picture im about to show you isnt the best example it demonstrates the effect of a thinner laser:
The left was manufactured on a laser that is 28 nanometers thin. Its cuts must have a minimum of 28 nanometers in gaps. The right was using a 20 nanometer laser. Theres a significant savings in are just by translating an old design into a smaller laser.
Transistors will all generate heat. The bigger the transistor, the more heat that is generated as the entire surface heats up. A CPU designed on a smaller laser, if nothing else is changed, tends to run much cooler at the same load. This also means that if you go to a thinner laser, you can decide to devote more area to more processing, to run at the same temperature. In other words: Same physical size as before, but a lot more transistors for processing power.
Modern day GPU's are made up of *billions* of transistors, still taking up around the same space as GPU's made 10 years ago of only around a million or two.
Most of processor advances in technology are related to developing thinner lasers, and making the manufacturing process more reliable with those lasers. Theres relatively little breakthroughs in terms of radical processor designs themselves.
The biggest problems facing CPU's today and getting them to increase in performance is how to handle the heat. We are nearly reaching the limits of silicon's thermale envelope. We may have to start to move to a new material, but otherwise, the theory of simply cutting them with thinner lasers is the same.
Again, most of this si an oversimplification of the process, but it should give you a basic idea.
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