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# DesignEconomics

SamuelNascimentoPagliarini

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## The cost of a product

Whenever a product is bought it has an
associated price from the customer point
of view.

## The company that developed that

product has surely not guessed that
value.

=
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The cost of an IC
When that product contains or simply is
an IC that cost must be thoroughly
estimated.

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The cost of an IC
Estimating the cost of an IC is just a part of
the problem.

## Cost: How much was payed to create it.

Price: How much the customer is charged.
Value: How much it is worth to the customer.
win-win
situation.

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The cost of an IC
The next slides will present a series of topics
that are part of the cost of an IC.

## After that we will work on a spreadsheet,

throw some numbers in and see what
happens...

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The cost of an IC
As in other types of products, the cost of an
IC can be separated into two major
components:

## Fixed costs or NRE (non recurring expenses)

Variable costs (recurring expenses)

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## Fixed costs or NRE

NRE costs are those that are spent once
during a the design of an IC.

## Independent of the sales volume or the

number of products sold.

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## It has a strong dependency on:

Design complexity
Aggressiveness of the specs
Productivity of the design team
Reuse, automation, IP integration...

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## Fixed costs or NRE

Besides the engineering itself, NRE also
includes the prototype manufacturing cost.

Cf = Ce + Cm
Fixed cost = engineering cost +
manufacturing cost

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## Engineering cost (Ce)

The engineering cost includes both personnel
cost and support costs.

Ce = Cp + Cs
Engineering cost =
personnel cost + support cost

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## Personnel cost (Cp)

Includes but it is not limited to all the labor
related to:
Specification and architectural design
Logic capture (coding)
Verification via simulation
Synthesis
Layout (floorplanning, place, route, etc.)
Physical Verification (timing, power, etc.)
Sign-off and final DRC
Test generation

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## Support cost (Cs)

The support cost includes but it is not limited
to:
Computer costs
Education or re-education costs (training)
General bills

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Some numbers...
Support item

Annual cost
Salary
50-100k
100k
...
???

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## Manufacturing cost (Cm)

These costs are the fixed costs to get the
first ICs from the foundry. They include:

Testing cost
Packaging cost
Cm = Cmk + Ct + Cpk
Manufacturing cost =
mask cost + testing cost + packaging cost
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Increases as the process dimensions are
reduced.
It is proportional to the number of steps used
in the process (layers).
Lower layers usually are more expensive.
Foundries may support subprocesses where
the number of metal layers is customizable.
For 90n and below the mask cost can easily
reach the 1M figure.

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## Testing cost (Ct)

There are two sources of cost here. The
probe board and the tester use.

## The probe board is a wiring board that

interfaces with the tester. Probing boar cost is
in the 1-50k range.
The tester is paid based on the time spent
testing, similar to a rent. Each chip is tested in
a few seconds but since the volume is high
this cost may be significant later.

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## Packaging cost (Ct)

Standard packages should be aimed to
reduce cost. The package choice impacts
directly on the layout of the chip.

If a custom package is
required there will be
extra costs for designing
and manufacturing it.

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Variable cost
Variable or recurring costs are those directly
linked with the IC (mass) production.

## Cv = (Cd + Cdt + Cdp) / y

Cd = die cost
Cdt = die test cost
Cdp = die package cost
y = final yield
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## Die cost (Cd)

Cd = wafer cost / dies per wafer
The wafer cost is usually fixed (500-3k U\$).
The number of dies per wafer is, in essence,
the area of the wafer divided by the die are,
discounting the lost dies on the wafer
perimeter.

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## Die test & package cost (Cdt&Cdp)

Die test cost. Proportional to the number of
test vectors. Probe board reused?

## Die package cost. Same?

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Yield (y)
Final yield is the final percentage of dies that
are fully functional. Both the test and package
steps have a yield percentage associated.

## The test yield is somewhat in the ~70%90+% range.

Packaging yield is somewhat in the 95%-99%
range.

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What now?
As we have seen there are high costs to
make an IC, specially the fixed ones. The key
to obtain success in the IC industry is to dilute
these costs in the volume.

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What else?

## Profit? Sales margin? Taxes?

MPW
Schedule and TTM
Respins
Design reuse
Lab test
BOM (Bill of materials)

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What else?

## Legal issues and patents

PCB Assembly
Dispatching and freight
...

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## Q1 Cost x Value x Price

What is the meaning of...

Value?
Cost?
Price?

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## Q1 Cost x Value x Price

What is the meaning of...
Value? How much the customer feels the
product is worth.
Cost? How much was payed to produce the
product.
Price? How much the consumer was charged.

## What is considered a win-win situation?

VALUE > PRICE > COST
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Q2 - NRE
When it comes to NRE costs, it is well
established that it has a strong dependency
on:
Design complexity
Aggressiveness of the specs
Productivity of the design team
Reuse, automation, IP integration...

## Q: Which one of the 4 items above is more

prone to enable easy cost savings?
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Q2 - NRE
Q: Which of the items is more prone to
enable easy cost savings?
A) Design complexity
B) Aggressiveness of the specs
C) Productivity of the design team
D) Reuse, automation, IP integration...
E) All of the above.
A: D
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Q3 - NRE
When it comes to NRE costs, it is well
established that it has a strong dependency
on:
Design complexity
Aggressiveness of the specs
Productivity of the design team
Reuse, automation, IP integration...

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Q3 - NRE
Q: Which of the items is less prone to
enable easy cost savings?
A) Design complexity
B) Aggressiveness of the specs
C) Productivity of the design team
D) Reuse, automation, IP integration...
E) All of the above.
A: C
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## Q4/Q5 - Support cost (Cs)

The support cost includes but it is not limited
to:
Computer costs
Education or re-education costs (training)
General bills
...

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## Q4 - Support cost (Cs)

Q: Which one of the 4 items is usually more
expensive?
A) Computer costs
C) Education or re-education costs (training)
D) General bills
A: B
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## Q5 - Support cost (Cs)

Q: Suppose your company is reaching for a
brand new market niche like digital TV. Which
one of the 4 items is usually more expensive?
A) Computer costs
C) Education or re-education costs (training)
D) General bills
A: C
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Q6 - Yield
Q: What is yield?
A: In Portuguese yield means rendimento.
It is a percentage of the total number of
dies that meet a satisfiability criteria.

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Q7 - Yield
Q: What kinds of yield are present in a final
die yield?
I) Test yield
II) Packaging yield
III) Die cutting yield
A) Only III
C) II and III
E) Only I

B) I and II
D) I, II and III

A: D
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Q8 Variable cost
Q: Why there is no manufacture cost (Cm)
in the variable cost?