Apple's iPad Chip Development Cost Estimated in $1 Billion Range

[cmaier]

Intel have spent over $28 BILLION in 3 years for R&D, so apples 1 billion does not seem to bad, but of course it depends on what extent they modified the original ARM chip

Kimbie

Apples and Oranges. Intel owns at least 8 fabs, each of which costs $1-$2 billion to build/update each time they switch to a new process generation. Intel also makes many more variations of chip designs (Itanium, i3,i5,i7, graphics, chipsets, etc) than does Apple.

 

[doctoree]

So this brings up two interesting questions:

1. What was the complete RnD Cost of the iPad, including all soft and hardware?

2. Will Apple expand its Chip research into CPU and GPU for Desktop and Laptop?

 

[John.B]

If it's one thing Apple has, it's money to throw at projects like designing their own chips from scratch.

While I certainly see the advantages that brings (gfx & battery optimization to name a couple), they may have been able to sell the iPad for even less if they had used a cookie-cutter ARM.

With a series of compromises that chooses not to make. Sometimes it's good to be in control of your own destiny.

There is a long-term vision for what was PA Semi; it's not some lark to throw money at. Apple doesn't work that way.

 

[lilo777]

So this brings up two interesting questions:

1. What was the complete RnD Cost of the iPad, including all soft and hardware?

I saw a number of $1 billion. But I am sure that there is no good way to count this. Given that Apple spends $1 billion per on all R&D, the number loks too high. On the other hand, iPad uses a lot of research that was done for iPhone so should it be counted too?

2. Will Apple expand its Chip research into CPU and GPU for Desktop and Laptop?

There is absolutely no way for this to happen.

 

[John.B]

Apples and Oranges. Intel owns at least 8 fabs, each of which costs $1-$2 billion to build/update each time they switch to a new process generation. Intel also makes many more variations of chip designs (Itanium, i3,i5,i7, graphics, chipsets, etc) than does Apple.

To bad their on-board graphics chips are such *****...

 

[cmaier]

To bad their on-board graphics chips are such *****...

Money can't buy graphics happiness.

 

[Glideslope]

With this in the Ipad and im guessing in the next iphone, i think its money very well spent

The A4 will turn the next iPhone into a New Classification of Device.

 

[carmenodie]

Apple spends a ton of money on R & D while other other low-life companies sit in the sidelines waiting to see what they come up with ...

Then they copy Apples products leaving out the quality ... nice eh?

Rock on Apple!

You ain't lying! that is why other companies in the same field are so scared of Apple. Say what you want about Jobs, he runs an awesome ship. I'm waiting with baited breath for the ipad 3g in April.

 

[JAT]

Designed to make a profit? If MS wanted to they could have set the price of the 360 to make a profit from the start, it would have to have been about £500 or something.

Apple can easily make a profit as they charge the Apple tax, people will pay whatever it costs to buy the latest and greatest mac product.

All companies do this if they want a profit, the only difference is what percent is used, and Apple is hardly near the highest of that. Comparing a console video game system to anything but another console is silly. The market is completely different than computers. Maybe it could be deemed similar to some cellphones, barely.

Esp when it comes to a company trying to break out on top of a saturated market, which both Sony and M$ have done. LOL, Sony ended up fighting themselves with the PS3. And they expect peripheral sales (games, controllers, add-ons) to cover the difference and make up the profit that doesn't come from the main system. This is the reason for their prices that don't or barely cover costs. You simply don't see this in any other product marketplace, none I can think of, anyway. Not even in other aspects of the console gaming marketplace, they make better profit on wires than Apple does on anything. (at least, they should, Monster Cable certainly does)

I use both PC and Macs so I am not biased either way,

Ownership of products does not dictate attitude. I own both and I am definitely biased.

 

[doctoree]

I saw a number of $1 billion. But I am sure that there is no good way to count this. Given that Apple spends $1 billion per on all R&D, the number loks too high. On the other hand, iPad uses a lot of research that was done for iPhone so should it be counted too?

It's certainly overlapping in manny areas. Im sure Apples accountung department has numbers nevertheless and I'm also quite sure well never hear about them.

There is absolutely no way for this to happen.

Given Apples virtually limitless resources in both talent and funds and after Apples succesfull A4 developement I wouldnt be so sure. Of course this would be a major undertaking but the advantages would be INCREDIBLE. More flexibilility, energy savings in and after production, secrecy, inovation, independence.....

 

[cmaier]

Given Apples virtually limitless resources in both talent and funds and after Apples succesfull A4 developement I wouldnt be so sure. Of course this would eb a major undertaking but the advantages would be INCREDIBLE.[/QUOTE]

1) They don't have limitless resources in talent. They have a nice design team, but not one that is big enough or experienced in x86 design.

2) They don't have an x86 license. IBM probably won't do them any favors and fab the chip for them (plus IBM is expensive). Global Foundries certainly won't fab something that "competes" with AMD.

 

[Sgt Pepper]

There was an excellent drama / documentary on the BBC last year telling the story of Acorn Computers, entitled "Micro Men". There was some dramatic license but the main facts and a lot of the things that happen were all true.

Well worth a watch if you're in to retro computer stuff, though it doesn't go as far as the Arm development (stops just before it).

Yes, It doesn't go as far as ARM but it was excellent - I thought I was watching a documentary for the first couple of minutes. It takes you back to the early days of the home computer boom and the so-called "rivalry" between Clive Sinclair and Chris Curry of Acorn. It does stop before ARM though.

Link here (micro men 0 -7):

http://www.youtube.com/watch?v=2y8IkcUGV9w

 

[Sgt Pepper]

As cmaier mentioned, you are correct.

Wikipedia article: http://en.wikipedia.org/wiki/Acorn_Computers_Ltd

Cheers for the link

 

[wizard]

This is total BS, no one else spends that much on ARM spins.

Even if the cost for PA is factored in I still doubt that designing the chip cost much more than $500 million. $100 million would otherwise be high for the hardware.

Now cost for the total project is another thing. What useually kills these sorts of projects is balloning software costs. Here though Apple already has a good start in iPhone OS.

As to iSuppli numbers I still don't think people understand what is being estimated there. ISuppli is reasonable in their numbers, this 1 billion cost estimate for hardware is outlandishly high.

Besides this cost isn't even interesting. What is interesting is Apples future hardware plans for these chips. The reality is iPad is hardly a jusification for this development effort.


Dave

 

[techwhiz]

$1 Billion wrong

Someone needs to go back to whatever they were doing before development cost analysis.

That figure must include the cost of P.A. Semi and some. What I don't know.
P.A. Semi cost Apple almost $300 million. Okay.
Engineers for 2 years after that. Say 200 engineers. I think that may be way too many. An average burdened cost of $200K per year. That is about $40 million.
Add in tools and some other stuff and you can't get to $1 Billion.
Apple doesn't build or invest chip fabs.

They license the ARM core and modify it. Not sure what they pay ARM but it's NOT $600 Million.

 

[Mattie Num Nums]

The article is very vague. But seriously, they need to pay:

1) for a license. This is typically per-chip.
2) for the fab lots. This is typically per wafer start.
3) for engineers. A team of 50 is more than enough to design, verify, test, etc. these little chips. Let's call it 100. Average salary is, say $125K.
4) for EDA licenses. Even a huge company like AMD spent less than $20M on that.
5) for workstations, electricity, cubicles, etc.

Do the math. Like I said, it's never cost anyone $1B unless they also bought a fab (MicroUnity comes to mind).

I PM'd Fred Weber on facebook to ask him what he thinks, since the NYT article doesn't imply that he had anything to do with the $1B estimate.

Not to nitpick but based off experience the average salary is QA/Testers salary is around $32 an hour, average Engineer is anywhere from 75k to 90k.

 

[cmaier]

Not to nitpick but based off experience the average salary is QA/Testers salary is around $32 an hour, average Engineer is anywhere from 75k to 90k.

I worked on microprocessor design teams for three companies in silicon valley for 10 years. My estimate might be a little more accurate

 

[kdarling]

Not to nitpick but based off experience the average salary is QA/Testers salary is around $32 an hour, average Engineer is anywhere from 75k to 90k.

Holy smokes. Where do these underpaid engineers work?



It's not just about raw salaries of course. Benefits and building and support infrastructure for those employees raise the cost. Most projects around me in NJ use $150K - $200K per engineer-year for their budget proposals.

 

[LtRammstein]

When will they have a review of the Apple A4 processor? I want to know exactly what ARM it's based off of and if it really is power efficient.

 

[cmaier]

When will they have a review of the Apple A4 processor? I want to know exactly what ARM it's based off of and if it really is power efficient.

Not until someone can actually have an iPad to disassemble, obviously.

 

[techwhiz]

Engineer Cost

I worked on microprocessor design teams for three companies in silicon valley for 10 years. My estimate might be a little more accurate

I think you are pretty on the mark for $200K since; that is the number I also used.

Someone should look at the IEEE salary survey.
I know, there is no way I'd do chip design for $90K or even $100K.
Folks I know, with the experience needed to do low power, 45-65nm design would laugh if you offered them anything less than $130-145K and full benefits.

 

[deconstruct60]

Not to nitpick but based off experience the average salary is QA/Testers salary is around $32 an hour, average Engineer is anywhere from 75k to 90k.

You are not including benefits: healtcare , payroll tax, social sec , 401K matching , etc. etc. etc. Nor the boss/management. It isn't what the employee takes home it is what the employee costs the company. Reasonable rule of them is take the take home salary and 2x it (especially where there are tons of perks.). if the average salary is around 80K then 100K is probably low, not high. It is a nice round number though to see if in the ballpark. However that STILL isn't going to get you anywhere need driving $1B costs.

 

[cmaier]

You are not including benefits: healtcare , payroll tax, social sec , 401K matching , etc. etc. etc. Nor the boss/management. It isn't what the employee takes home it is what the employee costs the company. Reasonable rule of them is take the take home salary and 2x it (especially where there are tons of perks.). if the average salary is around 80K then 100K is probably low, not high. It is a nice round number though to see if in the ballpark. However that STILL isn't going to get you anywhere need driving $1B costs.

That salary is also low. Salary for someone with 1 year experience in 1997 at Sun was at the top end of his range. 2-3 years experience gets you over $100K in silicon valley CPU design nowadays. If you figure a range of experience on a given design team, $120-$140 is about the average.

 

[dernhelm]

As cmaier mentioned, you are correct.

Wikipedia article: http://en.wikipedia.org/wiki/Acorn_Computers_Ltd

I almost bought an Archimedes at the time. And I live in the US. I was very enamored of Acorn and what they were doing.

Wish now I HAD pulled the trigger. I think I could've learned a lot with that machine, stuff that would even have helped me now.

 

[dagamer34]

"At the same time, Apple, Nvidia and Qualcomm are designing their own takes on ARM-based mobile chips that will be made by the contract foundries. Even without the direct investment of a factory, it can cost these companies about $1 billion to create a smartphone chip from scratch."

But of course, none of those people ARE designing from scratch, they're starting with ARM based mobile chips and working from there. What a sensationalist headline seeking article.

And even then, nVidia is designing the GPU and integration for it's Tegra chips from scratch. Apple licensed it's GPU from someone else.

$1 billion makes no sense. It is probably far less.