Let’s parallella bitcoin by exploring how much money it costs to design modern chips. 1B in total development costs and involved thousands of engineers in aggregate.
3M over the span of 3 years. Includes architects, logic designers, verification engineers. This can include application developers, driver developers, validation developers, library developers. Many foundries offer sponsored free IP today for SRAM, IO, and logic cell libraries. Other IP like CPU cores and state of the art high speed IO can be very expensive. The more features and the more state of the art IP is included in a product, the more expensive it gets. EDA tool costs depends on how much risk you are willing to take with your design.
For an SOC that is scheduled to go into the latest smartphone, failure is not an option and no expense is spared in terms of the simulation and validation tool costs! For simpler less high profile chip products it may be better to trade risk of a respin for less costly tools. Chips that ship in the millions must use these production masks to get cost down. Test development costs depend on per-unit test costs and the requirements imposed by the respective markets. 1B depending on the complexity of the product. The following table shows the different cost components involved in producing a chip ready for mass production. Simplicity and volume are again first order factors.
1 in ultra high volume. Meanwhile, larger thermally advanced custom flip-chip packages produced in low volume cost tens of dollars. The more expensive the package, the more important it is to make sure there is no yield fallout post-packaging. Test costs depend on test equipment time and operator labour rates.
With automated chip testing equipment often costing millions of dollars, per second depreciation time can be significant. In all cases, test cost is minimized by minimizing test time. Some IP modules used in chip design demand per chip royalty fees. In most cases, IP royalty is not a first order concern in determining chip costs. As chip production volumes increases, the per unit cost inevitably goes down. In any one of these categories, the difference in per unit cost between building 10,000 units and 10M units can be anywhere from 2X to 10X.
With the right foundry, assembly, and test partners in place, established semiconductor companies and startups alike compete on a level playing field to start, but the company that ships the most units will generally have an insurmountable profitability advantage over time. Now that we have covered development and production costs, let’s get back to the poster’s original topic regarding pricing. Semiconductor companies sometimes announce high volume pricing for new products without specifying how many units need to be purchased. If you have to ask how many that means, you are probably not going to be able to get that price. Someone supposedly got pricing X on a certain product. Completely meaningless data unless someone extended you an offer to buy chips at that price. Many semiconductor companies will publish 1K volume pricing for their openly available products.
This is a great start, since these pricing tables are used as a guideline for external distributors. Note that large volume semiconductors distributors rarely carry inventory, so it may take up to 12 weeks to get parts shipped to you at these prices. This is the price of a chip in inventory that ships within 24 hours. The only price that matters in the end is the one that has been officially offered YOU. 10M units a year can be as much as 10X. The table below shows the process that a semiconductor vendor will goes through with every customer before revenue is finally realized.