Back in 1965, Gordon Moore (then working at Fairchild Semiconductor, but soon to help found Intel) published an article called “Cramming More Components Into Integrated Circuits” in Electronics magazine.

Moore predicted that the number of transistors on computer chips would double about every 18 months.  Although he later amended the time scale for what would become known as Moore’s Law to every two years, it has remained The Law for 45 years.

To put it in concrete terms, when Moore published his paper, the most advanced chips contained about 60 devices, while Intel’s hottest new chip, the Itanium, boasts about 1.7 billion (with a “B”) transistors.

You can thank Moore’s Law for your GPS-capable, picture-taking, video downloading cell phone, your kids’ hand-held, 3-D video games and a host of other chock-full-of-chips devices.  You can also see it as the basis for the growth of the computer industry; if a device with double the power is going to be available in a couple of years, you’re going to need to trade in your old clunker for a new one a lot sooner than you would otherwise.

Moore has also noted that similar advances aren’t really possible in other industries.  If carmakers had been making parallel strides, cars would get 100,000 miles to the gallon and you could buy a Rolls Royce for less than a Starbucks latté.  Unfortunately, cars would also be about a half an inch long.

Chip designers say that they can obey Moore’s Law for a few more years, but then they’re going to run into some resistance from another set of laws, the laws of physics.  Increasing chip density means that smaller chips with more devices will generate more heat but have less surface area to get rid of it.  And if the infinitesimal circuits on chips continue to shrink, the thickness of the materials separating them will be so thin that electrons will start leaking through the boundaries!

Of course scientists are working on new ideas for processors and data storage and software.  But the computer/handheld-device industry is built around Moore’s Law and the rapid turnover that it dictates.  Spectacular advances in integrated circuits are so commonplace that the tech sector takes miracles for granted and expects consumers to throw out last year’s machines with the trash.

If Moore’s Law is going to lose traction, where will The Next Big Thing come from?  The bumper stickers that you see in Silicon Valley that say “Please, God, Just One More Bubble” could go on the bumpers of lots of investors, too.  The global recession and the surprisingly robust recovery in the stock market that followed seem to be at a crux, and nobody knows where things will go from here.  This leaves stock investors looking for the companies that are ready to take the elevator, not the stairs.

I don’t have any more idea than you do of what The Next Big Thing is.  All I can do is to keep my eyes open and identify the familiar patterns of technical growth, momentum, support, resistance and correction.  By staying out of the business of prediction, I can make the most of accurate description and analysis of what’s actually happening.  It’s the essence of what Cabot growth advisories have been doing for many years, and it pays off