Is it accurate to refer to the average wafer price as "manufacturing cost" rather than "materials cost"? Shouldn't the amortized cost of the fab be included as part of "manufacturing cost"? Or is that captured in any part by "R&D"?
Either way, the drug comparison is apt. The chip/pill is a tiny thing with negligible marginal cost. The plant costs billions. Pricing seems arbitrary, but these huge expenses do need to be recouped somehow.
To eliminate fab cost from the equation you could price out what it would cost to get it built by a 3rd-party fab. It certainly wouldn't be as cheap as shown here, but still cheap enough to make the point of the article.
No, NRE is masking and tooling cost. Fab costs would need to be amortized separately. (Because fab costs get spread across many, many products; the 1000 wafers used as a guesstimate in this article is tiny compared to what a fab produces over its life.)
If anything, the Fab costs should be included in the cost-per-wafer.
Analogue fabs are highly customized. You could probably make some back of the napkin comparisons but you wouldn't be able to actually manufacture it in another fab without a lot more R&D spend.
The difference is with analogue everything is a full custom, with digital it's only the trailblazers. Also linear devices require an order of magnitude more control and characterization than digital even when full custom.
I think we're mostly in violent agreement. There's a lot for an analog IC - those mid-manufacturing test pads are a great example of pain. Testing costs are going to be higher, there will be extra NRE on custom test harnesses, and all the rest you allude to. But they'll be able to get multiple projects out of the basic investment in litho gear. I think it depends where one draws the line at the (very large) CapEx of "the fab".
Fab cost is the NRE because that's how a hardware developer is paying the fab costs. Most fabs' cost are spread across its many customers and products. They build it into whatever they charge for the runs. If AD owns the fab, then it's likely a separate organization in the company doing something similar. So, for purposes of AD9361 designers, the NRE includes the fab costs since they probably didn't build a fab as part of AD9361 project. Just paid one the NRE.
Not when you're estimating the cost to develop a specific chip. I can avoid the per-project NRE by simply not doing the project.
And, again, if a project produces more chips, then more of the fab production costs will be amortized across that project. The definition of Non-Recurring Engineering costs are that they are fixed and don't increase as the unit volume goes up: https://en.m.wikipedia.org/wiki/Non-recurring_engineering
The way the fab could be considered NRE is if the fab were built only for this chip. (Or if a fixed percent of it was). In advance.
Either way, the drug comparison is apt. The chip/pill is a tiny thing with negligible marginal cost. The plant costs billions. Pricing seems arbitrary, but these huge expenses do need to be recouped somehow.