Semiconductor Cost Drivers - Transparency for cost engineers in semiconductor manufacturing

Integrated circuits (ICs) play a central role in today's electronics landscape. The increasing miniaturization and technological complexity of semiconductors pose enormous challenges for cost engineers. A precise analysis of the "semiconductor cost drivers" is essential in order to make economically viable decisions in product development and purchasing. The bottom-up approach in particular provides a reliable basis for cost estimation.

The main cost blocks in semiconductor production are divided into material costs, manufacturing costs and overheads. Front-end manufacturing - the process in which the circuit structures are created on the wafer - is particularly noteworthy. This process chain includes lithography, etching, ion implantation and surface polishing. In quantitative terms, front-end processes account for around 80 % of total IC manufacturing costs, with lithography alone accounting for around 25 % of total costs.

A dominant cost driver is the investment required for lithography systems. Modern EUV lithography machines, which are required to produce the finest structure sizes below 7 nm, cost up to USD 300 million per unit. In comparison, prices for DUV systems range from USD 50-100 million. The choice of lithography technology therefore has a decisive influence on process depth and long-term capital commitment.

The use of materials also plays a key role. Raw silicon, process chemicals, specialty gases, photoresists and mask sets make up a significant proportion of the variable costs. With advanced nodes, the requirements for purity and accuracy increase dramatically, which leads to higher prices for wafers and mask sets. For masks in particular, the costs can quickly reach several millions per design, depending on the number of layers and tolerances.

The overhead costs, which account for around 35% of the total costs, should also not be underestimated. These include personnel, IT infrastructure, clean room operation, energy consumption and support services. The more complex the manufacturing process, the greater the need for qualified specialist personnel and process monitoring - especially for highly developed nodes. As overhead costs are highly location-dependent, benchmarking based on regional key figures is essential.

Another cost driver results from plant utilization and throughput time. As many production steps are sequential and expensive machines are occupied for long periods, depreciation must be precisely distributed over the number of units produced. Process length, cycle time and scrap rate therefore directly influence the unit costs of a die.

In the back-end area, which accounts for around 20% of manufacturing costs, the focus is on separating the wafer, connecting it to substrates and forming the housing. Although more manual work is required here, the capital intensity is comparatively low. Nevertheless, this area should not be neglected in the overall calculation.

For cost engineers, this means A realistic cost estimate requires a deep understanding of the technological parameters and economic framework conditions. Only those who precisely evaluate the influence of structure size, quantities, production technology and location factors can make reliable statements about the cost potential. Knowledge of the most important semiconductor cost drivers therefore makes an indispensable contribution to product cost optimization and procurement strategy in the semiconductor industry.

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White Paper - Cost Calculation of Integrated Circuits (PDF)

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