The law is named after Intel co-founder Gordon E. Moore, who described the trend in his 1965 paper in which he observed that the number of components in integrated circuits had doubled every year from 1958 until 1965 and predicted that the trend would continue for 10 more years!
Although initially Moore's law was an observation and forecast. But it became widely accepted and served as a goal for an entire industry. This drove both marketing and engineering departments of semiconductor manufacturers to focus enormous energy aiming for the specified increase in processing power that it was presumed one or more of their competitors would soon actually attain. It became a self-fulfilling prophecy.
This trend has continued for more than half a century. 2005 sources expected it to continue until at least 2015 or 2020.International Technology Roadmap for Semiconductors has growth slowing at the end of 2013, after which time transistor counts and densities are to double only every 3 years.
The exponential processor transistor growth predicted by Moore does not always translate into exponentially greater practical CPU performance. Also, more and more transistors cannot be squeezed without hitting the fundamental limitations of atomic dimensions.
We know that further speed cannot be obtained by mere doubling of transistors. We need to embrace parallelism. In recent times, multi-core chips, multi-threaded software design are gaining traction. This is further discussed in the other blog entries under the 'Quest for Speed' series.
See also: Quest for Speed - Amdahl's Law