P=VI is to calculate power usage, specifically conversion from electricity to heat (which applies in almost all electrical devices). Although your description does explain a downside of vdroop, it does not explain accurately why it happens. Yes, a poorly designed board suffering severe vdroop will actually make the problem of overheating MOSFETs worse and worse, as the voltage drop (using V=IR) across overheated MOSFETs will result in a power loss and they will overheat more. And the more the MOSFETs are overheated the worse the voltage drop-a vicious cycle. Contrary to your explaination, current (I) can only be increase up to a certain point until the MOSFETs are working at full capacity-which would be limited by overheating (a safety feature of MOSFETs).

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