IC Cost Estimation: Transparent cost structure for semiconductor production

The cost calculation of integrated circuits (ICs) is one of the most demanding challenges for cost engineers in electronics production. Although ICs are central components of modern devices - whether in the automotive sector, in aerospace or in the field of artificial intelligence - their cost structure often remains opaque. The white paper "Cost Calculation of Integrated Circuits" provides a sound insight into bottom-up costing and is therefore a valuable tool for IC cost estimation for cost management professionals.

A key finding of the study is that around 80% of the total costs of an IC are incurred in the front-end process, i.e. during wafer production and exposure. Only 20% is accounted for by the back end, i.e. packaging and final delivery. This insight allows a targeted evaluation and control of the cost-driving factors.

The manufacturing process begins with wafer production using the Czochralski process. High-purity silicon wafers are produced here, the quality and diameter of which have a significant influence on subsequent costs. Even at this early stage, high investments are made in machines such as wire saws and cleaning systems, as well as consumables such as etching agents and DI water. The complexity of the wafer process is directly reflected in the price, especially for 300 mm wafers, which are required for modern technologies.

In the subsequent front-end process, the structure of the IC is projected onto the wafer using lithography. This phase is considered the most capital-intensive part of production. The exposure machines used - whether DUV or EUV - not only determine the resolution of the circuits, but also the largest share of the machine costs. For advanced nodes with structures of less than 10 nm, there is no alternative to EUV technology, whose machine prices can be up to USD 300 million. In calculative practice, this means that lithography alone accounts for around 25 % of the total cost of an IC.

In addition to direct production costs, indirect factors also play a key role. Overhead costs - which include infrastructure, cleanroom maintenance, IT and personnel, for example - account for around 35% of total IC costs on average. These costs vary greatly depending on the production location, process complexity and degree of automation. A precise regional benchmarking strategy is therefore essential for cost engineers in order to model competitive prices.

The back-end process, the last step before delivery, involves cutting the wafers to size, wire bonding and packaging in housings (e.g. BGA-416). Even if only around a fifth of the total costs are incurred here, specific requirements - such as high impact resistance or complex heat sinks - can significantly increase this proportion.

The bottom-up method presented allows detailed IC cost estimation by making investment, material and process costs transparent. In contrast to parametric models, it offers greater accuracy, but requires extensive technical knowledge. In a strategic context, this methodology not only enables well-founded make-or-buy decisions, but also the development of realistic target prices for procurement.

Conclusion: IC cost estimation is not a static process, but requires continuous adaptation to technological and market changes. The white paper referenced here provides a robust foundation for the implementation of practical costing strategies and is a must-read for anyone involved in semiconductor cost analysis.

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