I agree with you that the hardware will rapidly shrink in size, but what I think will make the most difference is the software (and firmware).
We will learn to write programs to make better use of parallel processors, and reduce the need for so much hardware.
When the Intel Pentium processors first came out I decided that I needed to know more about how they work. I don't claim to have become an expert, but I was fascinated by aspects of the internal architecture.
It really contains multiple parallel processing such that a stream of instructions can be processed simultaneously, with special hardware to patch things up in the few cases where a later instruction is dependent upon the results of a prior instruction. It's kind of like, "Just do it and correct any errors later". The cost of this approach is a much more highly complex chip. The benefit is much faster processing.
This approach to processing would make it critical to design compilers that are compatible with the processor. The compiler would optimize speed by avoiding situations where the processor would have to do more "fixing up".