He then said that he could not explain how the new 1/20th of of a wavelength drawing works because new physics had been learned, and it had not been in his physics book.
> new physics had been learned, and it had not been in his physics book.
Again, there is a difference between learning new techniques and phenomena running on top of known physical law, and learning new fundamental laws. When engineers say "new physics", they refer to the former, but when physicists say "new physics", they refer to the latter. And there hasn't been any new physics, more or less, since the 60's.
The computational limits are thought to be encoded in the fundamental laws, in a way very analogous to the limiting speed c.
I think the keyword here is "current".
While the development of "new physics" is unlikely, those developments have never failed to surprise us before. We have ever increasing capabilities to both explore and observe the world around us. I find it highly unlikely that we have cracked all there is to physics.
While all this discussion about the actual laws of physics is very important, I would like to underline the fact the the other half of the reasoning about whether 128 bits are enough is centered around the fact that we are of course not able to handle that amount of energy, it sounds so obvious for all of us that this argument is used as a punchline.
While I cannot imagine how it could be done (or why), this is the kind of things doesn't involve changing our knowledge about basic physical laws.
If you need smaller wavelengths still, you could use gamma lasers - though so far these are only possible in theory. There is some speculation that positron annihilation could be used to drive such a laser.
edit: looks I was wrong - while ultraviolet lasers exist, the currently available ones still don't have a small enough wavelength for say a 45 nm process. Other tricks like multiple patterning and immersion are used.