Strategic insights into Integrated Circuit Cost Calculation for Cost Engineers
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The precise calculation of semiconductor components is one of the most challenging tasks in the field of technical cost management. Integrated circuit cost calculation in particular requires a deep understanding of the complex manufacturing processes, material costs and investment-intensive machine infrastructure associated with the production of these key components. For cost engineers, it forms the basis for well-founded procurement decisions and price negotiations.
The focus is on a methodically structured bottom-up approach that takes into account all direct and indirect cost elements along the IC value chain. Starting with wafer production, through the front-end processes - which transfer the circuit design to the silicon wafer - to the back-end, which includes packaging and electrical connection, all process stages are analyzed in detail.
The cost dominance of the front-end process is particularly noteworthy: according to the analysis, around 80 % of the total production costs of an integrated circuit are attributable to the wafer process, with lithography alone accounting for around 25 % of these costs. This process stage is considered to be the most capital-intensive stage, due to extremely expensive exposure systems such as DUV or EUV systems. For example, a single EUV system costs up to USD 300 million - an investment that significantly determines the unit costs.
With a share of around 35%, overhead costs also play a central role in the overall calculation. These include not only administration and overheads, but also qualification-intensive personnel, facility services, clean room technology and IT infrastructure. Their amount varies greatly depending on the location of the production site - for example, fabs in Taiwan and the USA have very different cost structures. Regional benchmarking is therefore a key factor for valid cost models.
In comparison, back-end processes such as dicing, bonding, molding and final packaging initially appear to be of secondary importance, accounting for around 20% of manufacturing costs. However, the requirements for process quality and automation are constantly increasing here in particular, as sensitive structures need to be reliably protected and electrically contacted.
In contrast, macro parameters such as the number of CPU cores, memory size, clock frequency and housing type are used for the parametric cost estimate. This method is particularly suitable for incomplete data or early development phases. However, bottom-up costing remains the method of choice for transparent and precise cost models, as it takes into account the actual technical complexity and resource-related expenditure.
Ultimately, the approach outlined here not only enables precise integrated circuit cost calculation, but also actively supports cost engineers in recognizing cost drivers, negotiating technical target prices and simulating scenarios in the event of location or technology changes. The combination of technical understanding, economic evaluation and market knowledge is essential to cope with the increasing complexity of modern ICs.
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