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> Moore's law happens when the output of the system can be used to improve the system that produced the original output.

Actually I’ve never understood how this was true for microchips. Anyone know? I understood it as the industry just Moore’s law for planning iterations?

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At the very least when you design a new microprocessor you design and simulate it using software running on a computer. Then when that new processor releases, you build a computer with it and then you can simulate and design an even more powerful microprocessor. The tools and production equipment in the fab are also likely designed and partially simulated using CAD tools as well so there's an additional benefit there.

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