Computer chips are made out of semiconductors. Every two years or so, we find another way to manufacture smaller semiconductors. If you make a chip smaller but keep the design the same, it will use less power. This also means that you can build more semiconductors on the chip and get more performance out of the same power budget.
The first year that a manufacturer moves to a smaller process, the yields tend to be worse (there is a higher rate of defective or faulty chips) so the designs tend to be more sophisticated on the second chip designed on that process.
Intel referred to this as their ‘tick–tock’ model, where there would be a process size shrink followed by a microarchitecture revision.
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