Fundamentals of Quantitative Design and Analysis - Computer Architecture: A Quantitative Approach - page 27

Volume is a second key factor in determining cost. Increasing volumes affect cost in several
ways. First, they decrease the time needed to get down the learning curve, which is partly
proportional to the number of systems (or chips) manufactured. Second, volume decreases
cost, since it increases purchasing and manufacturing efficiency. As a rule of thumb, some led
signers have estimated that cost decreases about 10% for each doubling of volume. Moreover,
volume decreases the amount of development cost that must be amortized by each computer,
thus allowing cost and selling price to be closer.
Commodities are products that are sold by multiple vendors in large volumes and are essen-
tially identical. Virtually all the products sold on the shelves of grocery stores are commod-
ities, as are standard DRAMs, Flash memory, disks, monitors, and keyboards. In the past 25
years, much of the personal computer industry has become a commodity business focused on
building desktop and laptop computers running Microsoft Windows.
Because many vendors ship virtually identical products, the market is highly competitive.
Of course, this competition decreases the gap between cost and selling price, but it also led
creases cost. Reductions occur because a commodity market has both volume and a clear
product definition, which allows multiple suppliers to compete in building components for
the commodity product. As a result, the overall product cost is lower because of the compet-
ition among the suppliers of the components and the volume efficiencies the suppliers can
achieve. This rivalry has led to the low end of the computer business being able to achieve bet-
ter price-performance than other sectors and yielded greater growth at the low end, although
with very limited profits (as is typical in any commodity business).
Cost Of An Integrated Circuit
Why would a computer architecture book have a section on integrated circuit costs? In an
increasingly competitive computer marketplace where standard parts—disks, Flash memory,
DRAMs, and so on—are becoming a significant portion of any system's cost, integrated circuit
costs are becoming a greater portion of the cost that varies between computers, especially in
the high-volume, cost-sensitive portion of the market. Indeed, with personal mobile devices'
increasing reliance of whole systems on a chip (SOC), the cost of the integrated circuits is much
of the cost of the PMD. Thus, computer designers must understand the costs of chips to un-
derstand the costs of current computers.
Although the costs of integrated circuits have dropped exponentially, the basic process of
silicon manufacture is unchanged: A wafer is still tested and chopped into dies that are pack-
aged (see Figures 1.13 , 1.14 , and 1.15 ). Thus, the cost of a packaged integrated circuit is
In this section, we focus on the cost of dies, summarizing the key issues in testing and pack-
aging at the end.