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Just kind of a random question, how much does a modern processor actually cost? Just the raw materials, not factoring in R&D, cost of fabrication facilities, etc. Any insight would be appreciated. 
How much does a processor actually cost to make?
- Thread starter frostedflakes
- Start date
Random answer not based on any actual product/company is less than $10. Depends how many you can fit on a single wafer.
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So silicon is probably what constitutes the majority of the cost right, with the substrate and pins costing relatively little? Thanks for the reply.
cost will be a direct function of the maturity of the process it is manufactured on plus the cost of connecting all the bumps on the die to the package itself. and add the assembly on top of that. the yield of the process being used also depends on the scale and speed your part needs to run at. it's a very open ended question. did you have a particular design in mind?
TuxDave
Lifer
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Well, since you're factoring out the costliest part of the operation mainly the R&D behind the processor and the REALLY REALLY EXPENSIVE lithography tools, the only thing left is silicon, some electricity to run the machines and some bottles of acid. I would put the number at around a dollar per chip.
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Well yields would effect pricing of the chip, but not how much each costs, which is what I'm curious about.
I know some processors are going to differ (obviously an Itanium with a huge cache and die will be more expensive than a Athlon64), 200mm vs. 300mm wafer probably makes a big difference in price, lots of variables. Was just looking for a ballpark number, the average for a consumer processor (i.e. A64, P4, etc.).
From the sound of it the cost is about what I was expecting, a few dollars up to maybe $10 or so. + whatever a heatsink ordered in bulk costs for retail processors, maybe another few dollars.
I know some processors are going to differ (obviously an Itanium with a huge cache and die will be more expensive than a Athlon64), 200mm vs. 300mm wafer probably makes a big difference in price, lots of variables. Was just looking for a ballpark number, the average for a consumer processor (i.e. A64, P4, etc.).
From the sound of it the cost is about what I was expecting, a few dollars up to maybe $10 or so. + whatever a heatsink ordered in bulk costs for retail processors, maybe another few dollars.
Originally posted by: frostedflakes
Just kind of a random question, how much does a modern processor actually cost? Just the raw materials, not factoring in R&D, cost of fabrication facilities, etc. Any insight would be appreciated.
Reality check: by your definition, the cost of producing a car is under $1000 USD...
Originally posted by: TerryMathews
Originally posted by: frostedflakes
Just kind of a random question, how much does a modern processor actually cost? Just the raw materials, not factoring in R&D, cost of fabrication facilities, etc. Any insight would be appreciated.
Reality check: by your definition, the cost of producing a car is under $1000 USD...
Not far off actually, if your just speaking materials. Thats when steel is cheap anyways. The majority of the cost of a car is labor.
The materials aren't all that expensive in raw form not to mention the tiny quantities you need, it's the way you process them that's expensive and difficult. (Not to mention the design time involved)
I realize the original question was about "just raw materials" but the big numbers are disclosed publicly and the numbers that the OP was asking about are not, so I'll stick with the stuff that I'm allowed to say.
There are several aspects to this question. There's raw cost to fabricate, package and test a CPU. Then there's the full cost of everything - from the design team (engineer's salary, building, hardware costs, CAD costs, infrastructure), to the fabrication facility (building, hardware, fab workers),
Someone replied that it's US $1b for the first CPU, and then $10 afterwards. Both of these numbers seem lower than I would have expected. A 65nm fab runs approx. US $3-5b and a CPU takes about a long time to move through a fab and requires lots of technicians, design teams are approx. 250 engineers paid approx. $100k annually for a design that takes 3-5 years to design, Then there's costs like CAD software, computers, etc. things like power and air conditioning. Costs for materials - like fab materials are super-pure so that even fab water is very expensive (when you factor in the filtering needed for it). And lastly there's the cost to package and test the CPU - and the engineers and technicians responsible for this section of the flow.
Lastly, the cost for just a raw CPU is very dependent on yield... if you have a 12" wafer and only get a few working parts off of it then your cost per part will be very high.
In my experience, manufacturers guard their manufacturing cost numbers even more than they do sales numbers - yield numbers are very "need to know". I would estimate that fewer than 0.1% of the people working at Intel have any solid idea of exactly what it costs to manufacture, say, a Pentium 4. Unforuntately, I fall very close to that 0.1%, if not precisely into that camp. I could make a very close educated guess... too close to be able to comment in a forum.
There are several aspects to this question. There's raw cost to fabricate, package and test a CPU. Then there's the full cost of everything - from the design team (engineer's salary, building, hardware costs, CAD costs, infrastructure), to the fabrication facility (building, hardware, fab workers),
Someone replied that it's US $1b for the first CPU, and then $10 afterwards. Both of these numbers seem lower than I would have expected. A 65nm fab runs approx. US $3-5b and a CPU takes about a long time to move through a fab and requires lots of technicians, design teams are approx. 250 engineers paid approx. $100k annually for a design that takes 3-5 years to design, Then there's costs like CAD software, computers, etc. things like power and air conditioning. Costs for materials - like fab materials are super-pure so that even fab water is very expensive (when you factor in the filtering needed for it). And lastly there's the cost to package and test the CPU - and the engineers and technicians responsible for this section of the flow.
Lastly, the cost for just a raw CPU is very dependent on yield... if you have a 12" wafer and only get a few working parts off of it then your cost per part will be very high.
In my experience, manufacturers guard their manufacturing cost numbers even more than they do sales numbers - yield numbers are very "need to know". I would estimate that fewer than 0.1% of the people working at Intel have any solid idea of exactly what it costs to manufacture, say, a Pentium 4. Unforuntately, I fall very close to that 0.1%, if not precisely into that camp. I could make a very close educated guess... too close to be able to comment in a forum.
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Yes, all very informative answers, and don't feel bad pm, I know you can be giving away any of Intel's secrets of anything. Appreciate all the info you could give though.
Originally posted by: Train
Originally posted by: TerryMathews
Originally posted by: frostedflakes
Just kind of a random question, how much does a modern processor actually cost? Just the raw materials, not factoring in R&D, cost of fabrication facilities, etc. Any insight would be appreciated.
Reality check: by your definition, the cost of producing a car is under $1000 USD...
Not far off actually, if your just speaking materials. Thats when steel is cheap anyways. The majority of the cost of a car is labor.
Even with American labor a car doesn't cost much, maybe $3k total for a small/medium car. big additional costs are r&d, meeting standards, marketing.
A cpu probably costs a nickle to a dollar, mostly for the gold plating on the contact pins.
The machinery to make it though, costs hundreds of millions if not more.
You can't just factor out all of the major costs and expect the resulting amount to be relevent to anything. As PM has stated (who always provides great input imo), You have billions in initial up front costs, and millions more in operating costs, R&D, and allowances for low yields. Look at some financial statements for other types of manufacturing processes to get a better idea.
don't forget one of the biggest costs of all, validation. you could have the most complex design in the world and that's great, but if it hasn't been validated, it's useless. presilicon is hard enough. post silicon wide area test is even harder. it might not be part of the whole "raw materials" manufacturing chain, but it is one of the biggest costs in determining a price point. wonder why server chips cost so much? validation is a big component of that.
Hell, if we are just going to factor in everything you might as well just take the lowest price you can find for a specific chip, then take like 10% off. That should put you somewhere near the cost of the final product.
Well, 10% off the volume pricing might put you somewhere near the amortized cost per CPU, but that also takes into account things like yield (you get fewer 'fast' chips than 'slow' ones, so faster chips are priced higher to compensate) and up-front costs like R&D and fab setup.
Material cost is next to nothing; silicon's real cheap (although large, pure crystal wafers cost significantly more than just raw silicon, but still not all that much compared to what you can sell the CPUs you make out of them for).
Operating costs (electricity, staff for the fab, etc.) are probably the majority of the 'production cost', but are dwarfed by R&D costs and the lithography equipment.
I would estimate ongoing production costs in the tens of dollars ($40-80, maybe?) for CPUs, maybe somewhat more for high-end GPU chips (since they are much bigger and you will get fewer chips per wafer). That's a VERY rough estimate. Then you have to take yield into account on top of that.
But in terms of pricing and profit margins that's pretty meaningless, since you have to put in hundreds of millions to billions of dollars up front before you can make a single chip.
I really didn't the OP was looking for any sort of precision in his answer, especially he was throwing out R&D, CapEx, and labor costs. But maybe other people are interested.
If you want to really get a good idea about manufacturing costs including labor, CapEx, and R&D let's look at another segment of the industry that's much more manufacturing oriented, DRAM. If you look around on the net you can find die sizes for both processors and DRAM, for quick comparison let's say that a 512Mbit DRAM chip is basically the same size as a processor. Now one can easily look up the going spot market price for said chip at dramexchange.com, price is hovering around $4-$5/chip. Now considering that nearly all DRAM manufacturers are profitable today i'll let you do the math.
The fabrication process to create a processor includes more steps, so there is some additional cost but considering the amount of fixed costs both segments have to invest for manufacturing it's not incredibly more expensive, especially for a high volume processors.
*Not speaking for any company, any reference to products is entirely in a generic sense.
If you want to really get a good idea about manufacturing costs including labor, CapEx, and R&D let's look at another segment of the industry that's much more manufacturing oriented, DRAM. If you look around on the net you can find die sizes for both processors and DRAM, for quick comparison let's say that a 512Mbit DRAM chip is basically the same size as a processor. Now one can easily look up the going spot market price for said chip at dramexchange.com, price is hovering around $4-$5/chip. Now considering that nearly all DRAM manufacturers are profitable today i'll let you do the math.
The fabrication process to create a processor includes more steps, so there is some additional cost but considering the amount of fixed costs both segments have to invest for manufacturing it's not incredibly more expensive, especially for a high volume processors.
*Not speaking for any company, any reference to products is entirely in a generic sense.
what's expensive is maintaining the fab (clean room, precise lithography, etc). The substrate and materials cost practically nothing.
So the total cost of ores needed for making the metals + the organic materials for the packaging? Probably not even a penny.
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