They can be made from large wafers. A defect typically breaks whatever chip it's on, so one defect on a large wafer filled with many small chips will still just break one chip of the many on the wafer. If your chips are bigger, one defect still takes out a chip, but now you've lost more of the wafer area because the chip is bigger. So you get a super-linear scaling of loss from defects as the chips get bigger.

With careful design, you can tolerate some defects. A multi-core CPU might have the ability to disable a core that's affected by a defect, and then it can be sold as a different SKU with a lower core count. Cerebras uses an extreme version of this, where the wafer is divided up into about a million cores, and a routing system that can bypass defective cores.

They have a nice article about it here: https://www.cerebras.ai/blog/100x-defect-tolerance-how-cereb...