As the graph shows, software has become the dominant cost factor for your hardware - just making the silicon doesn't give you a product, you need the software as well. If you can live of open source, that'll be great but most of the time you'll need to go through significant efforts to create the software required to make the chip into a product. And from there the acceptance of your product is set by the ability of your (potential) customers to get their apps running on your system. In short, putting out the (silicon) hardware is only (less than) half the job.
It still is expensive not because it costs $100M but because it requires a team with a large set of skills and they don't come cheap. Even with a budget of tens of millions chips have been made but any further growth and advanced features will sink in more money than you started out with and evetuallu it becomes a successful self sustaining product but by that time your expenses have neary shot up to 2 to 4 times your start up budget.
Good article Andreas, yes, $100M number refers to complex SOC types designed by Intel's, Nokia's and TI's of the world...I know first hand few small, analog ASICs that were developed under $2M, similalrly to the figures you are quoting...but the perception in VC community remains that IC design is very expensive...Kris
In the real world, very few ASICs require the leading-edge technology that cost up to $100 million to develop. Such applications are limited in their deployment to multi-multi mega-million unit markets.
At JVD Inc., we focus on the Analog ASIC market, which, according to research firm IC Insights, constitutes almost 60% of the nearly $37B of Analog ICs sold in 2010. None of these come close to your cost projections…. Typical NRE + Tooling ranges from $250K to $650K, making them affordable to thousands of potential customers.
As we unveil EE Times’ 2015 Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. Panelists Dan Armbrust (investment firm Silicon Catalyst), Andrew Kau (venture capital firm Walden International), and Stan Boland (successful serial entrepreneur, former CEO of Neul, Icera) join in the live debate.