A GlobalFoundries factory in Dresden, Germany. Photo: Matthias Rietschel/Getty Images

For decades now, semiconductors have been made using ever-finer wiring, enabling the famous Moore's law, which predicts a doubling of performance every two years or so. But, as transistors have gotten smaller, some chipmakers are struggling to keep up.

Driving the news: The latest shift to 7-nanometer wiring is proving to be the toughest yet. Intel has already admitted challenges and now one of the other industry giants, GlobalFoundries, said Monday it's going to focus on other types of advances rather than moving to 7 nanometers amid the high costs of the new generation.

Analysts say it's not that GlobalFoundries and others can't get to 7 nanometers eventually — it's more whether it would be worth their while.

"The problems are only partially technical — given enough talent and time, foundries can make 7nm and 5nm, and beyond. The problem is the economics — hiring the talented researchers, paying for the research, buying the equipment, and building the fabs. All that is getting exponentially more expensive. GlobalFoundries owners decided the push to 7nm was no longer going to be economically worth the investment."
Kevin Krewell, principal analyst, TIRIAS Research
"This is also proof positive that only a handful of chip companies can afford leading-edge manufacturing as they are the ones who have to pay for the capability."
Patrick Moorhead, president, Moor Insights & Strategy

The bottom line: The challenges give the upper hand to those moving forward with 7 nanometers — namely, TSMC and Samsung. It also leaves those who contract out for manufacturing with just two options.

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