[hedgehog]

First, you point out that Moore's law was about the transistor count per chip at the optimum cost process, and that's very important. We have transitioned from a more-for-less leading edge to a more-for-more leading edge. It's overall sensible for Apple to build giant chips on the newest processor not because it's cheaper but because it gives them an overall more competitive product (they only sell whole devices). Just because Apple and Nvidia keep making bigger chips doesn't mean that Moore's law is working the way it was originally proposed (Intel's marketing department notwithstanding).

In any case, at the time and still I think GF was probably correct in that they would not be able to compete at the leading edge and make money at it. Remember, AMD and IBM separated fabs out for a reason and not having the scale necessary to compete was probably a big part of that. AMD has succeeded on TSMC and IBM seems to be doing ok on Samsung. Most chips are not at the leading edge and don't need to be, and so most fabs don't need to be leading edge to serve customers. There are all kinds of applications where a more mature and better characterized process is better, whether for harsh environments, mixed signal applications, or just low volume parts where $20M of tooling cost is not worth it.