Cost CS510 Computer Architectures Lecture 2 - 1

Lecture 2Lecture 2

CostCost

Lecture 2Lecture 2

CostCost

Cost CS510 Computer Architectures Lecture 2 - 2

nMOSFETnMOSFET

NMOS Transistor(NMOS FET)

P-type silicon

Gate oxidation(approx 0.05 micron)

n+polysilicon low pressurechemical vapor deposition

N+

As ion implantation

Form Source and Drain areas

SiO2, Oxidation(approx. 0.6 micron)

Cost CS510 Computer Architectures Lecture 2 - 3

NMOS InverterNMOS Inverter

n+ n+

Etching contact areaaluminum deposit, form pattern

Aluminum(connection)

Oxidation grow

n+ n+

Cost CS510 Computer Architectures Lecture 2 - 4

Wafer, Die, ICWafer, Die, IC

Processing

F F F F

F F F F F F

F F F F F F

F F F F F F

F F F F F F

F F F F

F F F F

F F F F F F

F F F F F F

F F F F F F

F F F F F F

F F F F

FF

Die

FF

IC

Packaging

Slicing

Wafer

Cost CS510 Computer Architectures Lecture 2 - 5

Integrated Circuits CostsIntegrated Circuits Costs

Processing

Packaging

TestingTestingTestingTestingYields =good dies

processed dies

IC Cost = Die Cost + IC Cost = Die Cost + Testing costTesting cost + Packaging Cost + Packaging CostFinal Test YieldFinal Test Yield

WaferDie

TestingTestingTestingTesting

Cost CS510 Computer Architectures Lecture 2 - 6

Integrated Circuits CostsIntegrated Circuits Costs

Die costDie cost = Wafer cost Dies per Wafer x Die yieldDie costDie cost = Wafer cost Dies per Wafer x Die yield

IC cost = Die cost + Testing cost + Packaging cost Final test yieldIC cost = Die cost + Testing cost + Packaging cost Final test yield

Cost CS510 Computer Architectures Lecture 2 - 7

Integrated Circuits CostsIntegrated Circuits Costs

Dies per waferDies per wafer = p * ( Wafer_diam / 2)2 p * Wafer_diam Die Area (2 * Die Area)0.5

- Test Dies per wafer

IC cost = Die cost + Testing cost + Packaging costIC cost = Die cost + Testing cost + Packaging cost Final test yieldFinal test yieldDie cost = Wafer costDie cost = Wafer cost Dies per WaferDies per Wafer x Die yield x Die yield

IC cost = Die cost + Testing cost + Packaging costIC cost = Die cost + Testing cost + Packaging cost Final test yieldFinal test yieldDie cost = Wafer costDie cost = Wafer cost Dies per WaferDies per Wafer x Die yield x Die yield

Cost CS510 Computer Architectures Lecture 2 - 8

Integrated Circuits CostsIntegrated Circuits Costs

Defects_per_unit_area x Die_Area

manufacturing complexity(No. of masking levels))

Die YieldDie Yield = Wafer yield x {1+ }

IC cost = Die cost + Testing cost + Packaging cost Final test yieldDie cost = Wafer cost Dies per Wafer x Die yield

Dies per wafer = p x ( Wafer_diam / 2)2 p x Wafer_diam Die Area (2 x Die Area)0.5

IC cost = Die cost + Testing cost + Packaging cost Final test yieldDie cost = Wafer cost Dies per Wafer x Die yield

Dies per wafer = p x ( Wafer_diam / 2)2 p x Wafer_diam Die Area (2 x Die Area)0.5

Cost CS510 Computer Architectures Lecture 2 - 9

Integrated Circuits CostsIntegrated Circuits Costs

example : defect density : 0.8 per cm2

= 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, $27case 2 : 25 good 2.25-cm2 dies, $140

Die Cost goes roughly with (die area)4

Cost CS510 Computer Architectures Lecture 2 - 10

Real World ExamplesReal World Examples

From "Estimating IC Manufacturing Costs,” by Linley Gwennap, Microprocessor Report, August 2, 1993, p. 15

Chip Metal Line Wafer Defect Area Dies/ DieLayers Width Cost /cm2 mm2/Wf Yield Cost

486DX2 3 0.80 $1,200 1.08 1181 54% $12Power PC601 4 0.80 $1,700 1.312 1115 28% $53HP PA 7100 3 0.80 $1,300 1.01 9666 27% $73DEC Alpha 3 0.70 $1,500 1.22 3453 19% $149Super Sparc 3 0.70 $1,700 1.62 5648 13% $272Pentium 3 0.80 $1,500 1.52 9640 9% $417

Cost CS510 Computer Architectures Lecture 2 - 11

Die Test Cost = Test Jig Cost * Ave. Test Time

Die Yield

Packaging Cost: depends on pins, heat dissipation, beauty, ...

Other CostsOther Costs

Chip Die Package Test & Total

cost pins type cost assembly cost

QFP: Quad Flat PackagePGA: Pin Grid ArrayBGA: Ball Grid Array

486DX2 $12 168 PGA $11 $12 $35

Power PC 601 $53 304 QFP $3 $21 $77

HP PA 7100 $73 504 PGA $35 $16 $124

DEC Alpha $149 431 PGA $30 $23 $202

Super SPARC $272 293 PGA $20 $34 $326

Pentium $417 273 PGA $19 $37 $473

Cost CS510 Computer Architectures Lecture 2 - 12

Cost/PerformanceCost/PerformanceWhat is Relationship of Cost to Price?What is Relationship of Cost to Price?

Component Costs

List Price

100%Component Cost100%

Cost CS510 Computer Architectures Lecture 2 - 13

Cost/PerformanceCost/PerformanceWhat is Relationship of Cost to Price?What is Relationship of Cost to Price?

• Component Costs

List Price

100% Direct Cost 20% to 28%

72% to 80%ComponentCost

• Direct Costs (add 25% to 40% of component costs) Recurring costs: labor, purchasing, scrap,

warranty

Cost CS510 Computer Architectures Lecture 2 - 14

Cost/PerformanceCost/PerformanceWhat is Relationship of Cost to Price?What is Relationship of Cost to Price?

• Component Costs

List PricePC’s -- Lower gross margin- Lower R&D expense- Lower sales cost

Mail order, Phone order, retail store…- Higher competition Lower profit, volume sale,...

Gross margin varies depending on the productsHigh performance large systems vs Lower end machines

GrossMargin

45% to 65%

Direct Cost 10% to 11%

Component Cost

25 % to 44%

100%

• 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

Cost CS510 Computer Architectures Lecture 2 - 15

Cost/PerformanceCost/PerformanceWhat is Relationship of Cost to Price?What is Relationship of Cost to Price?

• Component Costs

100%

AverageDiscount

List Price

25% to 40%

GrossMargin

Avg. Selling Price34% to 39%

Direct Cost 6% to 8%

ComponentCost

15% to 33%

• 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

Cost CS510 Computer Architectures Lecture 2 - 16

Cost/PerformanceCost/PerformanceWhat is Relationship of Cost to Price?What is Relationship of Cost to Price?

ComponentComponent CostCostComponentComponent CostCost

100%100%

Direct CostDirect Cost

ComponentComponent CostCostComponentComponent CostCost

72~80%72~80%

20~22%20~22%

+(25~40)%

List PriceList Price

Direct CostDirect Cost

Gross MarginGross Margin

Average Discount Average Discount

ComponentComponent CostCostComponentComponent CostCost

15~33%15~33%

6~8%6~8%

34~39%34~39%

25~40%25~40%25~40%25~40%

+(33~66)%+(82~186)%

Direct CostDirect Cost

Gross MarginGross Margin

ComponentComponent CostCostComponentComponent CostCost

25~44%25~44%

10~11%10~11%

45~65%45~65%

ASPASP

Cost CS510 Computer Architectures Lecture 2 - 17

Cost CS510 Computer Architectures Lecture 2 - 18

Cost CS510 Computer Architectures Lecture 2 - 19

Assume purchase 10,000 units

Chip Prices (August 1993)Chip Prices (August 1993)

Chip Area Mfg. Price Multi- Comment

mm2 cost plier

Intense Competition

No Competition

Recoup R&D?

Early in shipments

386DX 43 $9 $31 3.4

486DX2 81 $35 $245 7.0

PowerPC 601 121 $77 $280 3.6

DEC Alpha 234 $202 $1231 6.1

Pentium 296 $473 $965 2.0

Cost CS510 Computer Architectures Lecture 2 - 20

Workstation Costs:Workstation Costs: $1000 to $3000$1000 to $3000

• DRAM: 50% 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 Lecture 2 - 21

Learning CurveLearning Curve

production costs

volume

time to introducenew product

Years

$Unit

Cost CS510 Computer Architectures Lecture 2 - 22

Volume vs CostVolume vs Cost

• Manufacturer:– If you can sell a large quantity, you will still get the profit with t

he 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 Lecture 2 - 23

Volume vs. CostVolume vs. CostRule 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.

What about PCs vs. WS?

Example:40 MPPs/year @ 200 nodes = 8,000 nodes/year vs. 100,000 Workstations/year

Workstation volume = 12.5 x MPP volume12.5 = 23.6

Workstation cost: (0.9)3.6 = 0.68

For workstations, cost should be 1/3 less of MPP

Cost CS510 Computer Architectures Lecture 2 - 24

Volume vs. Cost:Volume vs. Cost: PCs vs. WorkstationsPCs vs. Workstations

Single company: 20% WS market vs. 10% PC market

PC 23,880,898 33,547,589 44,006,000 65,480,000 WS 407,624 584,544 679,320 978,585 Ratio 59 57 65 67

1990 1992 1994 1997

65X = 26.0 (0.9)6.0 = 0.53 = For whole market 50% costs for PCs vs. Workstations

32X = 25.0 (0.9)5.0 = 0.59= For single company 60% costs for PCs vs. Workstations

Ratio 29 29 32 33

32

Cost CS510 Computer Architectures Lecture 2 - 25

High Margins On High Margins On High-End MachinesHigh-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 $ 40 (Mac Quadra)WS $ 42 (SS-10)Mainframe $1,920 (IBM 3090)Supercomputer $ 600 (M90 DRAM) $1,375 (C90

15 ns SRAM)

Cost CS510 Computer Architectures Lecture 2 - 26

Recouping Development Cost On Recouping Development Cost On Low Volume Microprocessors?Low Volume Microprocessors?

• SGI/MIPS sells 300,000 R4000s over product lifetime?• Intel sells 50,000,000 486s?

• 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

• Hennessy says MIPS R4000 cost $30M to develop• Intel rumored to invest $100M on 486

Cost CS510 Computer Architectures Lecture 2 - 27

Price/Performance:Price/Performance:

Gross Margin vs. Market SegmentGross Margin vs. Market Segment

0%

20%

40%

60%

80%

100%

Mini W/S PC

Average Discount

Gross Margin

Direct Costs

Component Costs