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Lecture 2 Cost

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

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Lecture 2 Cost

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  1. Lecture 2 Cost CS510 Computer Architectures

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

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

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

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

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

  7. 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)2 p * Wafer_diam Die Area (2 * Die Area)0.5 - Test Dies per wafer Integrated Circuits Costs CS510 Computer Architectures

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

  10. Chip Metal Line Wafer Defect Area Dies/ Die Layers Width Cost /cm2 mm2/Wf Yield Cost Real World Examples From "Estimating IC Manufacturing Costs,” by Linley Gwennap, Microprocessor Report, August 2, 1993, p. 15 486DX2 3 0.80 $1,200 1.08 1181 54% $12 Power PC601 4 0.80 $1,700 1.312 1115 28% $53 HP PA 7100 3 0.80 $1,300 1.01 9666 27% $73 DEC Alpha 3 0.70 $1,500 1.22 3453 19% $149 Super Sparc 3 0.70 $1,700 1.62 5648 13% $272 Pentium 3 0.80 $1,500 1.52 9640 9% $417 CS510 Computer Architectures

  11. Chip Die Package Test & Total cost pins type cost assembly cost Other Costs Die Test Cost = Test Jig Cost * Ave. Test Time Die Yield Packaging Cost: depends on pins, heat dissipation, beauty, ... 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 QFP: Quad Flat Package PGA: Pin Grid Array BGA: Ball Grid Array CS510 Computer Architectures

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

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

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

  15. List Price Average Discount Avg. Selling Price Gross Margin 100% Direct Cost Component Cost Cost/PerformanceWhat is Relationship of Cost to Price? • Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty • Component Costs • 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 25% to 40% 34% to 39% 6% to 8% 15% to 33% CS510 Computer Architectures

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

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  19. Chip Area Mfg. Price Multi- Comment • mm2 cost plier Chip Prices (August 1993) Assume purchase 10,000 units 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 Intense Competition No Competition Recoup R&D? Early in shipments CS510 Computer Architectures

  20. Workstation Costs:$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% CS510 Computer Architectures

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

  22. 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 CS510 Computer Architectures

  23. 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: 40 MPPs/year @ 200 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? CS510 Computer Architectures

  24. 1990 1992 1994 1997 • 65X = 26.0 (0.9)6.0 = 0.53 • = For whole market 50% costs for PCs vs. Workstations Ratio 29 29 32 33 • 32X = 25.0 (0.9)5.0 = 0.59 • = For single company 60% costs for PCs vs. Workstations 32 Volume vs. Cost:PCs vs. Workstations 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 Single company: 20% WS market vs. 10% PC market 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 $ 40 (Mac Quadra) WS $ 42 (SS-10) Mainframe $1,920 (IBM 3090) Supercomputer $ 600 (M90 DRAM) $1,375 (C90 15 ns SRAM) 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 50,000,000 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 CS510 Computer Architectures

  27. 100% 80% Average Discount 60% Gross Margin Direct Costs 40% Component Costs 20% 0% Mini W/S PC Price/Performance:Gross Margin vs. Market Segment CS510 Computer Architectures

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