Component prices drop over time without major improvements in manufacturing technology. The learning curve . In general, a chip, board or system with twice the yield will have half the cost. The learning curve is different for different components. This complicates new system design decisions.
Larger volume increases rate of the learning curve.
Volume decreases cost due to increases in manufacturing efficiency. Development cost amortization allows cost to get closer to selling price. This model assumes defects are randomly distributed. In 1995, it was between 0.6 to 1.2 per cm 2 . It is approximately 3.0 today.