How much does it cost Intel or AMD to make a chip?
- Thread starter Joshua_8
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- Mar 16, 2013
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First, you have to spend a billion dollars in R&D over the years.
Then, you have to spend a billion dollars on fab plants.
Then, you have to shell out 1/2 a billion on patents.
Then...you might be able to sell a chip to me for $150.
Then, you have to spend a billion dollars on fab plants.
Then, you have to shell out 1/2 a billion on patents.
Then...you might be able to sell a chip to me for $150.
That being said, I remember reading one article where intel was asked about latest prices (at the time latest) and why they priced them so high, and intel replied "because we can". Not saying anything mentioned above isn't true, but there are other considerations that go into price as well. Market monopoly can be one of them certainly 
frostedtim
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- Jul 1, 2014
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Generally the manufacturing and R&D costs dont get disclosed to the general public, but usually the excuse for setting prices is a combination of the two. Plus there is the issue of licensing, as both AMD and Intel integrate tech that sometimes is developed by third parties. They may even pay extra for exclusive rights to some tech. Then you have other factors, like brand recognition, marketing, and other factors that could make the retail cost markup that much more pronounced. AMD is trying to stick it to Intel but undercutting them, but Intel has constantly had high prices because they have dominated the market for so long that they could set favorable prices.
- Apr 29, 2006
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This is an older article, but it's a start.
http://www.eetimes.com/author.asp?doc_id=1282825
Intel has moved onto 450mm wafers. But the math behind it should be the same. You'll have to round down the size of the wafer, and then look up the die size for the chip you are wondering about. That can give you a chip/wafer figure. Keep digging around for more info. Yield rate? Cost per wafer? This is interesting stuff.
http://www.eetimes.com/author.asp?doc_id=1282825
Intel has moved onto 450mm wafers. But the math behind it should be the same. You'll have to round down the size of the wafer, and then look up the die size for the chip you are wondering about. That can give you a chip/wafer figure. Keep digging around for more info. Yield rate? Cost per wafer? This is interesting stuff.
- Dec 26, 2012
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And that's just the fancy stuff. Even if silicon is rather cheap, keeping stock overhead pretty low, you've got buildings to pay for, labor, retirement packages, transportation costs, fuel costs, electric bill, workman's comp, 401k matches, advertising, engineering costs etc etc etc, so that 5mmx8mm chunk of silicon went from kinda cheap to rediculously expensive per tray just to manufacture. And that's before all the wheeling and dealing over bulk buyers such as Dell or HP undercutting profit margins, just to make the sale, so that loss gets piled onto the average consumer to balance out profits.
1. The key factors that determine the manufacturing cost of a CPU are the depreciation of the fab equipment, the maturity of the fab process and it's defect density per square cm and the size of of the die. Minor adders are the cost of the package, assembly and electrical test.
2. The cost of the CPU is the manufacturing cost, R&D and G&A.
3. Last the retail price of the CPU is the cost, desired margin to meet profitability targets, market conditions/demand and retailer markup.
2. The cost of the CPU is the manufacturing cost, R&D and G&A.
3. Last the retail price of the CPU is the cost, desired margin to meet profitability targets, market conditions/demand and retailer markup.
- Apr 29, 2006
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Correct Karadjgne, but you can find that info in their financial statements. Once you know how many chips/wafers they get, and how many chips might be on them, you can start figuring out how much these other things effect the cost. Usually when we get asked this question it has to do with any many CPUs per wafer.
I guess another answer might be lots. Intel is a very successful company, and makes Billions every quarter. (At least I think it's Billions.) They are in no danger of losing money anytime soon.
I guess another answer might be lots. Intel is a very successful company, and makes Billions every quarter. (At least I think it's Billions.) They are in no danger of losing money anytime soon.
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