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PeterS comments on The Curve of Capability - Less Wrong
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Suppose A designs B, which then designs C. Why does it follow that C is more capable than B (logically, disregarding any hardware advances made between B and C)? Alternatively, why couldn't A have designed C initially?
It does not necessarily follow; but the FOOM contention is that once A can design a B more capable than itself, B's increased capability will include the capability to design C, which would have been impossible for A. C can then design D, which would have been impossible for B and even more impossible for A.
Currently, each round of technology aids in developing the next, but the feedback isn't quite this strong.
As per khafra's post, though I would add that it looks likely: after all, that we as humans are capable of any kind of AI at all is proof that designing intelligent agents is the work of intelligent agents. It would be surprising if there was some hard cap on how intelligent an agent you can make - like if it topped out at exactly your level or below.