Why aren't CPUs bigger? [closed]

Generally you're right: In the short term, increasing parallelization is not only viable but the only way to go. In fact, multi-cores, as well as caches, pipelining and hyper-threading are exactly what you propose: speed gain through increased chip area use. Of course, shrinking geometries does not collide with increasing die area use. However, die yield is a big limiting factor.

Die yield grows in inverse proportion to die size: large dies are simply more likely to "catch" wafer errors. If a wafer error hits a die, you can throw it away. Die yield obviously affects die cost. So there's an optimal die size in terms of costs vs. profits per die.

The only way to produce significantly larger dies is to integrate fault tolerant and redundant structures. This is what Intel tries to do in their Terra-Scale project (UPDATE: and what is already practiced in every-day products as Dan points out).

There are a lot of technical concerns (path lengths get too long and you lose efficiency, electrical interference causes noise), but the primary reason is simply that that many transistors would be too hot to adequately cool. That's the whole reason they're so keen to reduce the die size - it allows for performance increases at the same thermal levels.

Several of the answers given here are good answers. There are technical issues in increasing the size of the CPU and it will lead to a lot more heat to deal with. However all of them are surmountable given strong enough incentives.

I would like to add what I believe is a central issue: economics. CPUs are made in wafers like this, with a large number of CPUs per wafer. The real manufacturing cost is per wafer, so if you double the area of a CPU you can only fit half as many on a wafer, so the per-CPU price doubles. Also, not all of the wafer always comes out perfect, there can be errors. So doubling the area doubles chance of a defect in any specific CPU.

Therefore from the economic standpoint the reason they are always making things smaller is to get better performance/mm^2, which is the determining factor in price/performance.

TL;DR: In addition to the other reasons mentioned doubling the area of a CPU more than doubles the cost.

Adding more transistors to a processor doesn't automatically make it faster.

Increased path length == slower clock rate.
Adding more transistors will increase the path length. Any increase has to be used valuable or it'll cause an increase in cost, heat, energy, but a decrease in performance.

You can of course always add more cores. Why don't they do this? Well, they do.