You are trying to figure out whether to build a new fabrication facility for your IBM Power5 chips. It costs $1 billion to build a new fabrication facility. The benefit of the new fabrication is that you predict that you will be able to sell 3 times as many chips at 2 times the price of the old chips. The new chip will have an area of 186 mm2, with a defect rate of .7 defects per cm2. Assume the wafer has a diameter of 300 mm. Assume it costs $500 to fabricate a wafer in either technology. You were previously selling the chips for 40% more than their cost.

Figure 1.22 Manufacturing cost factors for several modern processors. α = 4.
a. What is the cost of the old Power5 chip?
b. What is the cost of the new Power5 chip?
c. What was the profit on each old Power5 chip?
d. What is the profit on each new Power5 chip?
e. If you sold 500,000 old Power5 chips per month, how long will it take to recoup the costs of the new fabrication facility?

Transcribed Image Text:

Die size Estimated defect Manufacturing ransistors (mm2) rate (per cm2) Chip IBM Power5 Sun Niagara AMD Opteron 389 380 199 30 75 75 size (nm) 130 90 90 (millions) 276 279 233