Cost structure in IC manufacturing: Insight for cost engineers

The production of integrated circuits (ICs) is a complex process characterized by extremely high investments, technical precision and a multitude of chemical and physical process steps. It is crucial for cost engineers to develop a deep understanding of these processes in order to be able to carry out well-founded cost calculations and economic analyses.

There are three main phases at the heart of IC manufacturing: Wafer production, front-end process and back-end process. Each of these steps involves specific cost factors that contribute significantly to the overall calculation.

Production begins with the manufacture of silicon wafers from monocrystalline silicon ingots, which are grown using the Czochralski process. Subsequent processing - cutting, polishing and cleaning - ensures the necessary surface quality. Although this stage only accounts for a small proportion of the total costs, it forms the basis for all further process steps.

The most significant phase in terms of cost is the front-end process, in which the electronic circuit is transferred to the wafer. This takes place in several passes using lithography, etching, doping and chemical-mechanical polishing. Lithography, in particular, is a key cost and technology driver. Depending on the technology used - deep ultraviolet (DUV) or extreme ultraviolet (EUV) - the investment and operating costs vary considerably. Although EUV lithography enables smaller structure sizes, it requires machines worth up to 300 million US dollars. Cost analyses show that lithography accounts for around 25% of total IC manufacturing costs.

After structuring, the chips are separated and packaged. This process includes dicing, bonding to a carrier substrate and final encapsulation. Even though this stage only accounts for around 20% of total costs, it involves a higher proportion of manual work, which makes it sensitive to fluctuations in labor costs.

IC manufacturing is capital-intensive. Around 75% of the set-up costs of a production facility are accounted for by investments in machinery. In addition to lithography systems, this also includes deposition, etching and cleaning systems. The material costs consist of high-purity silicon wafers, photoresists, etching agents and a variety of process gases. The requirements for materials and purity increase, especially for smaller structure sizes - which has a direct impact on costs.

A significant proportion, around 35%, of IC production costs are attributable to overheads. These include expenses for personnel, energy, IT infrastructure, quality assurance and location factors. Especially in regions with high labor and energy costs, these factors have a strong impact on unit costs. As a direct allocation to individual chips is difficult, cost engineers often fall back on location-specific benchmark values.

For cost engineers, a complete analysis of IC manufacturing provides a sound basis for identifying cost drivers. The analysis shows: Front-end processes dominate the cost structure, particularly through lithography and equipment investments. A precise, data-based cost calculation requires a detailed technical understanding and the ability to evaluate regional and technological differences.

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