Industry Expert Blogs

One of the most important and underrated tasks in a semiconductor company is creating the cost model. This is needed in order to be able to price products, and is especially acute in an ASIC or foundry business where there is no sense of a market price because the customer and not the manufacturer owns the intellectual property and thus the profit due to differentiation.

For a given design in a given volume the cost model will tell you how much it will cost to manufacture. Since a design can (usually) only be manufactured a whole wafer at a time, this is usually split into two, how many good die you can expect to get on a wafer, and what the cost per wafer is. The first part is fairly easy to calculate based on defect densities and die size and is not controversial. There is some guesswork involved ina a new process since you have to price volume production at the yield you expect to be able to achieve even though early in the life-cycle of the process you can't.

In fabs that run only very long runs of standard products there may be a standard wafer price. As long as the setup costs of the design are dwarfed by other costs since so many lots are run in a row, then this is a reasonable reflection of reality. Every wafer is simply assumed to cost the standard wafer price. In fabs that run ASIC or foundry work, many runs are relatively short. Not every product is running in enormous volume.

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