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One of the comments on this site pointed out performance issues with the esp32. I never worked with IoT devices or these boards but I would like to dabble since they are relatively inexpensive but it got me to look up and find out that the esp32 is manufactured in a 40nm process node. Are there like newer iterations with more performance at similar power budgets manufactured at more advanced nodes?

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2 cores of 240 MHz RISC is quite powerful. 40nm is not bad for microcontrollers. For example, the competing nRF52 series from Nordic is made on 55nm process.

Not really. There are newer iterations of the chips (including RISCV and Zigbee/Thread versions) but you won't see drastic performance/power improvements. Performance limitations are par for the course for this segment of the market, it's the tradeoff you make. There are also better SoC families that can get you a better tradeoff, but there aren't many as friendly to hobbyists as the ESP32. Maybe Nordic, or going into something more like a small SBC like the Pi Zero?

That said the ESP32 is far more powerful than you need for the vast majority of home automation type devices, it's only a handful of more intensive tasks like streaming video or ML where you start to run into issues. Even then you can often still do quite a lot if you're clever.

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