NYT: Chips like the A4 could cost $1 billion to design

1 Billion dollars? is that all? With the success of the iTunes and App stores, Apple will eventually see a return on their investment. Stay tuned!

http://iPadLot.com

The NYT has never been wrong about anything, ever...

When I read the quote from the NYT that these chips cost $1 billion to design, I busted out laughing. There is no way a chip like that can cost a billion to design.

Most players in the SOC (system on chip) business today create them from a mixture of self designed IP and 3rd party licensed IP (think ARM A9 or Mali). Typically they pay several million as a one time up front cost and a per chip licensing fee (< $2). Sometimes these IP blocks are provided "free of charge" by the silicon vendor in order to win business. The SOC maker does have to pay their own people to design the chip, as well as pay the vendor to design the chip. My point here is that all of the design costs add up to maybe 300 million for a chip, not a billion.

People should remember this post the next time they get all incensed when iSuppli analyzes that Apple "only" spends $200 or whatever on the parts for a $500 iPhone. Non-recurring engineering costs are no joke!

it's already widely known where the chip technology in a4 comes from. it was widely known before the chip name was known even. one can even point to where they bought the design AND who knows how to manufacture that chip and who they need to pay licenses to.

it's an apple branded chip more than an apple chip - there was no inventing involved, so fits ipad like a glove.

license costs are the big cost in 3rd party design socs - there's companies that would tailor you a solution happily for next to nothing if you paid them per fabbed chip(but the technology would be largely licensed, copy-pasted, and someone has to pay that stuff). quite possibly this is what was between PA and apple before?

would you like your next powerbook to be 1/8th of computing power of your current? of course not, so don't hope for armbook.. err a4.

So, will they add these to the new Macbook pros that should be coming out in the next few weeks? I would love to have an instant on computer that could get amazing battery life (at a performance hit compared to the i7/i5 CPUs that would be used when plugged in).

"actually making a state-of-the-art factory to create the chips will run you a cool $3 billion."

That's if you're building your own fab. It's a lot cheaper to contract with an existing fab to produce your chips.

I was under the impression that the A4 is just a modified Tegra 2. Why would Apple completely reinvent the wheel?