1. CS510 Computer Architectures
Lecture 2
Cost
Cost
CS510 Computer Architectures

2. CS510 Computer Architectures
nMOSFET
NMOS Transistor(NMOS FET)
n+polysilicon low pressure
chemical vapor deposition N+
SiO2, Oxidation
(approx. 0.6 micron)
Gate oxidation(approx
0.05 micron)
Form Source and Drain areas
As ion implantation
P-type silicon
Cost
CS510 Computer Architectures

3. CS510 Computer Architectures
NMOS Inverter
Oxidation grow n+ n+
Etching contact area
aluminum deposit, form pattern
Aluminum(connection)
Cost
CS510 Computer Architectures

4. CS510 Computer Architectures
Wafer, Die, IC
Wafer
F F F F
F F F F F F
F F F F
Processing
Slicing F IC F
Die
Packaging
Cost
CS510 Computer Architectures

5. Integrated Circuits Costs
IC Cost = Die Cost + Testing cost + Packaging Cost
Final Test Yield
Wafer
Die
Processing
Testing
Packaging
Testing
Yields =
good dies
processed dies
Cost
CS510 Computer Architectures

6. Integrated Circuits Costs
IC cost = Die cost Testing cost Packaging cost
Final test yield
Die cost = Wafer cost
Dies per Wafer x Die yield
Cost
CS510 Computer Architectures

7. Integrated Circuits Costs
IC cost = Die cost Testing cost Packaging cost
Final test yield
Die cost = Wafer cost
Dies per Wafer x Die yield
Dies per wafer = p * ( Wafer_diam / 2) p * Wafer_diam
Die Area (2 * Die Area)0.5
- Test Dies per wafer
Cost
CS510 Computer Architectures

8. Integrated Circuits Costs
IC cost = Die cost Testing cost Packaging cost
Final test yield
Die cost = Wafer cost
Dies per Wafer x Die yield
Dies per wafer = p x ( Wafer_diam / 2) p x Wafer_diam
Die Area (2 x Die Area)0.5
Defects_per_unit_area x Die_Area
(manufacturing complexity(No. of masking levels))
Die Yield
= Wafer yield x {1+
- a }
Cost
CS510 Computer Architectures

9. Integrated Circuits Costs
Die Cost goes roughly with (die area)4
example :
defect density : 0.8 per cm2
a = 3.0
case 1: 1 cm x 1 cm
die yield = (1+(0.8x1)/3)-3 = 0.49
case 2: 1.5 cm x 1.5 cm
die yield = (1+(0.8x2.25)/3)-3 = 0.24
20-cm-diameter wafer with 3-4 metal layers : $3000-$4000 in 1995
assume $3500
case 1 : 132 good 1-cm2 dies, $27
case 2 : 25 good 2.25-cm2 dies, $140
Cost
CS510 Computer Architectures

10. CS510 Computer Architectures
Real World Examples
Chip Metal Line Wafer Defect Area Dies/ Die
Layers Width Cost /cm2 mm2/Wf Yield Cost
486DX $1, % $12
Power PC $1, % $53
HP PA $1, % $73
DEC Alpha $1, % $149
Super Sparc $1, % $272
Pentium $1, % $417
From "Estimating IC Manufacturing Costs,” by Linley Gwennap, Microprocessor Report, August 2, 1993, p. 15
Cost
CS510 Computer Architectures

11. CS510 Computer Architectures
Other Costs
Die Test Cost = Test Jig Cost * Ave. Test Time
Die Yield
Packaging Cost: depends on pins, heat dissipation, beauty, ...
Chip Die Package Test & Total
cost pins type cost assembly cost
486DX2 $ PGA $11 $ $35
Power PC 601 $ QFP $3 $ $77
HP PA 7100 $ PGA $35 $ $124
DEC Alpha $ PGA $30 $ $202
Super SPARC $ PGA $20 $ $326
Pentium $ PGA $19 $ $473
QFP: Quad Flat Package
PGA: Pin Grid Array
BGA: Ball Grid Array
Cost
CS510 Computer Architectures

12. Cost/Performance What is Relationship of Cost to Price?
Component Costs
List Price
100%
Component
Cost
100%
Cost
CS510 Computer Architectures

13. Cost/Performance What is Relationship of Cost to Price?
Component Costs
Direct Costs (add 25% to 40% of component costs) Recurring costs: labor, purchasing, scrap, warranty
List Price
100%
Direct Cost
20% to 28%
Component
Cost
72% to 80%
Cost
CS510 Computer Architectures

14. Cost/Performance What is Relationship of Cost to Price?
Component Costs
Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty
Gross Margin (add 82% to 186%) nonrecurring costs: R&D, marketing, sales, equipment maintenance, rental, financing cost, pretax profits, taxes
List Price
PC’s -- Lower gross margin
- Lower R&D expense
- Lower sales cost
Mail order, Phone order, retail store…
- Higher competition
Lower profit, volume sale,...
100%
Gross
Margin
45% to 65%
Direct Cost
10% to 11%
Gross margin varies depending on the products
High performance large systems vs Lower end machines
Component
Cost
25 % to 44%
Cost
CS510 Computer Architectures

15. Cost/Performance What is Relationship of Cost to Price?
Component Costs
Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty
Gross Margin (add 82% to 186%) nonrecurring costs: R&D, marketing, sales,equipment maintenance, rental, financing cost, pretax profits, taxes
Average Discount to get List Price (add 33% to 66%):
volume discounts and/or retailer markup
List Price
100%
Average
Discount
25% to 40%
Avg. Selling Price
Gross
Margin
34% to 39%
Direct Cost
6% to 8%
Component
Cost
15% to 33%
Cost
CS510 Computer Architectures

16. Cost/Performance What is Relationship of Cost to Price?
List
Price
Direct Cost
Gross
Margin
Average
Discount
Component
Cost
15~33%
6~8%
34~39%
25~40%
Direct Cost
Gross
Margin
Component
Cost
25~44%
10~11%
45~65%
ASP
Direct Cost
Component
Cost
72~80%
20~22%
Component
Cost
100%
+(25~40)%
+(82~186)%
+(33~66)%
Cost
CS510 Computer Architectures

17. CS510 Computer Architectures
Cost
CS510 Computer Architectures

18. CS510 Computer Architectures
Cost
CS510 Computer Architectures

19. CS510 Computer Architectures
Chip Prices (August 1993)
Assume purchase 10,000 units
Chip Area Mfg. Price Multi- Comment
mm2 cost plier
386DX 43 $9 $
486DX2 81 $35 $
PowerPC $77 $
DEC Alpha 234 $202 $
Pentium 296 $473 $
Intense Competition
No Competition
Recoup R&D?
Early in shipments
Cost
CS510 Computer Architectures

20. Workstation Costs: $1000 to $3000
DRAM: % to 55%
Color Monitor: 15% to 20%
CPU board: 10% to 15%
Hard disk: 8% to 10%
CPU cabinet: 3% to 5%
Video & other I/O: 3% to 7%
Keyboard, mouse: 1% to 2%
Cost
CS510 Computer Architectures

21. CS510 Computer Architectures
Learning Curve
Unit $
production costs
time to introduce
new product
volume
Years
Cost
CS510 Computer Architectures

22. CS510 Computer Architectures
Volume vs Cost
Manufacturer:
If you can sell a large quantity, you will still get the profit with the lower selling price
Lower direct cost, lower gross margin
Consumer:
When you buy a large quantity, you will get a volume discount
MPP manufacturer vs Workstation manufacturer vs PC manufacturer
Cost
CS510 Computer Architectures

23. CS510 Computer Architectures
Volume vs. Cost
Rule of thumb on applying learning curve to manufacturing:
“When volume doubles, costs reduce 10%”
A DEC View of Computer Engineering by C. G. Bell, J. C. Mudge, and J. E. McNamara, Digital Press, Bedford, MA., 1978.
Example:
nodes = 8,000 nodes/year vs. 100,000 Workstations/year
Workstation volume = 12.5 x MPP volume
12.5 = 23.6
Workstation cost: (0.9)3.6 = 0.68
For workstations, cost should be 1/3 less of MPP
What about PCs vs. WS?
Cost
CS510 Computer Architectures

24. Volume vs. Cost: PCs vs. Workstations
PC 23,880, ,547, ,006, ,480,000
WS 407, , , ,585
Ratio
65X = (0.9)6.0 = 0.53
= For whole market 50% costs for PCs vs. Workstations
Single company: 20% WS market vs. 10% PC market
Ratio 32
32X = (0.9)5.0 = 0.59
= For single company 60% costs for PCs vs. Workstations
Cost
CS510 Computer Architectures

25. High Margins On High-End Machines
R&D considered Return On Investment (ROI) = about 10%
Every $1 R&D must generate $7 to $13 in sales
High end machines need more $ for R&D
Sell fewer high end machines
Fewer to amortize R&D
Needs Much higher margins
Cost of 1 MB Memory (January 1994):
PC $ (Mac Quadra)
WS $ (SS-10)
Mainframe $1,920 (IBM 3090)
Supercomputer $ (M90 DRAM) $1,375 (C90 15 ns SRAM)
Cost
CS510 Computer Architectures

26. Recouping Development Cost On Low Volume Microprocessors?
Hennessy says MIPS R4000 cost $30M to develop
Intel rumored to invest $100M on 486
SGI/MIPS sells 300,000 R4000s over product lifetime?
Intel sells 50,000, s?
Intel must get $100M from chips (100M/50M=$2/chip)
SGI/MIPS can get $30M from margin of workstations vs chips vs. 30M/0.3M=$100/chip
Alternative: SGI buys chips vs. develops them
Cost
CS510 Computer Architectures

27. Price/Performance: Gross Margin vs. Market Segment0%
20%
40%
60%
80%
100%
Mini
W/S PC
Average Discount
Gross Margin
Direct Costs
Component Costs
Cost
CS510 Computer Architectures