Thanks for the post! I was interested in what the difference between “Semiconductor industry amortize their R&D cost due to slower improvements” and “Sale price amortization when improvements are slower” are. Would the decrease in price stem from the decrease in cost as companies no longer need to spend as much on R&D?
For “Semiconductor industry amortize their R&D cost due to slower improvements” the decreased price comes from the longer innovation cycles, so the R&D investments spread out over a longer time period. Competition should then drive the price down.
While in contrast “Sale price amortization when improvements are slower” describes the idea that the sale price within the company will be amortized over a longer time period given that obsolescence will be achieved later.
Those ideas stem from Cotra’s appendices: “Room for improvements to silicon chips in the medium term”.
Thanks for the post! I was interested in what the difference between “Semiconductor industry amortize their R&D cost due to slower improvements” and “Sale price amortization when improvements are slower” are. Would the decrease in price stem from the decrease in cost as companies no longer need to spend as much on R&D?
For “Semiconductor industry amortize their R&D cost due to slower improvements” the decreased price comes from the longer innovation cycles, so the R&D investments spread out over a longer time period. Competition should then drive the price down.
While in contrast “Sale price amortization when improvements are slower” describes the idea that the sale price within the company will be amortized over a longer time period given that obsolescence will be achieved later.
Those ideas stem from Cotra’s appendices: “Room for improvements to silicon chips in the medium term”.