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


Apple may have finally gotten the chip they wanted with the iPad's A4, but a little freedom from contracting with other chip makers didn't come cheap. In a piece about how to make silicon chips, the New York Times estimates the cost to put a chip like the A4 together at a whopping $1 billion. And that's just for a design -- actually making a state-of-the-art factory to create the chips will run you a cool $3 billion. The NYT is just estimating for all companies here -- especially with Apple's purchase of PA Semi, they probably got the design for a relative song, and they're working with contractors to actually make the chips, rather than building their own factories. So $1 billion is a higher estimate than evidence would make you suspect.

For Apple, though, whatever the purchase price is, it was worth it -- watching Jobs talking about this chip and its power conservation (the iPad will last for a month on standby!) a few weeks ago, you get the sense that he's really excited to finally be in charge of his own chip destiny rather than having to rely on Intel or another silicon company to do it for them.

And heck, even if they did spend $4 billion to make the A4, Apple can build ten more chips and separate factories to build them with all of the cash they've built up. Considering the freedom that Apple got out of their A4 design, whatever it cost was probably a check they were more than happy to write.

[Via Apple Insider]

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