Intel's manufacturing cost: $40 per chip!

[General Nuisance]

Though Pentium 4s can sell for up to $637, Intel's average cost for making a chip comes to $40, according to a report from analysts In-Stat.

The report doesn't consider expenses related to design or marketing, or the fact that high-end chips can sell for more because fewer off the production line can actually run at top speed, but it does shed light on how Intel has managed to maintain healthy margins in an era of price declines. The cost has been steady at about $40 since 2003, according to In-Stat.

Previous Next Shrinking chip sizes a la Moore's Law plays a big part. Reducing the size of the chips means more processors can be popped out of a single wafer, thereby increasing the potential revenue without incurring massive additional costs. Intel has also continued to build new factories at a rapid pace, In-Stat noted. The chipmaker has three 90-nanometer fabrication facilities and will have four 65-nanometer facilities by the end of 2006. (The nanometer figures refer to the average feature size on the chips; a nanometer is a billionth of a meter.)

"Intel is one of the few vendors that can continue to push ahead alone and uses its technology and capacity as a competitive strength," Jim McGregor, In-Stat analyst, said in a statement.

Still, major technical challenges loom for everyone in shrinking chips from here on out. Though 65-nanometer chips are slated to come out later this year, companies will have to adopt a number of new technologies, such as metal transistor gates, in the 45-nanometer generation of chips, due out in 2007

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source: http://news.com.com/Intels+manufactu...l?tag=nefd.top


Jees you intel suckers are really getting ripped.... at least AMD is good stuff...

[Steve]

^^ as it says, it doesn't include millions of dollars of R&D.

[General Nuisance]

true but still... thats a bit to much mark up...

[Lakie]

Plus shipping costs (would have to be shipped specially given the type of product) Customs Clearance Fees, Legal Fees, Research and Development, Documentation printing an development, Packaging etc etc

That and they have to buget for the fact that they will have to destyroy or get rid of below cost a whole stack of the chips....

R&D For these types of companies also tend to work on borrowing moneyt and repaying it when the product goes live, henc theres interest to be paid...

Alao, just because a product retails at say $600, it dosent mean that intel is getting all of that, theres the profit margin for the Retailer and probably a netwrok of distributors...

Obvioulsy their making a profit, but its a misconsception tat because the product physical costs X amount then Retail - X is the profit...

[atholon]

Yeah R&D is the most expensive.

Look at AMD's FX57 It is $1,000

[VooDoo-]

wow 40 bucks? thought it would be less then that ..

hell everything is marked up the ass.. i payed 80 bucks for my sunglasses (130 if i bought them at the mall) and i'm sure they ddin't pay over 10 in materials ..

[Trojan]

One of the first things I did when I Graduated Bootcamp was go out and by some Gold Rimmed Ray Bans. They were broke a month later. I buy cheap ones to this day.

That is a helluva markup on those chips.

[atholon]

Hehe this is off topic but:

I used to sell sun glasses...

Umm the difference between cheap and expensive has very little to do with the plastic rims. It has to do with the lense. Cheap sunglasses put a spray on 100% UV protection which eventually rubs off depending on how many times you clean them. Since your glasses are tinted your iris is open more so more light comes in. This allows more UV rays to come in than if you were not wearing sunglasses.
The more expensive brands put the protection under a layer of plastic or glass so it doesn't rub off.

[SilentTrigger]

R&D is a small bit of cost, it is the most expencive single thing but theres administration costs and exchange rates, workers pay, logistical costs (logistical doesn't only mean transport, its a lot more to logistics then only transport) and alot more, you would be suppriced if you know what most companies ern from a product, its not high like you may think. I've seen figures from many companies and its always suppricing. Unfortently I'm not allowed to reveale those figures.

[BADDOG]

Originally posted by Trojan
One of the first things I did when I Graduated Bootcamp was go out and by some Gold Rimmed Ray Bans. They were broke a month later. I buy cheap ones to this day.

That is a helluva markup on those chips.

I totally agree!!!!

Warm Regards

[Jeff]

Interesting bit of info.