The assumption the author has made is that each chip has an R&D spend proportional to the revenue that it generates (~20%). This is clearly false. Some chips are relatively simple but sell in huge numbers so the R&D per revenue is extremely low. An SDR is one of the most complex chips you can make with a wide range of expertise going into the design. I can easily imagine $20+ million being spent on R&D for this chip and the market for it is pretty limited (not for consumer products). Even at 100,000 sales the R&D costs alone would be $200 per chip.

Pricing for these sort of niche low volume products is guided much more by what the market tolerates paying rather than the production and development costs. A large number of these types of chip never recover their R&D spends.

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.

It is worth mentioning that drugs are only so profitable because of their legal status. Drugs themselves are very cheap to make - additional cost is simply the risk of getting caught, security and so on. I think those factors don't exist for microchips, so the title is a bit misleading.

ADI is a remarkable company and they seem to be doing very well these days. If you’d told me ten years ago that in 2018 all of the old-line semiconductor companies (ADI, TI, etc) would be trading at all-time-high stock prices I would have thought you were nuts but here we are. Hardware is still quite valuable.

Some pictures looks like photos of futuristic cities taken from an airplane or from a drone.

I find them fascinating.

I didn't understand anything but man those pictures were beautiful. Would be pretty cool to print them out and hang them on a wall.

65nm process can be either 200mm or 300mm wafers.

At 21mm2 on a mature process, yield should be much higher than 50%. More like 90% is reasonable.

What the process? The tear down says mostly FET based, so I assume a BiCMOS?

The AD9361 require front end filtering, as the 5th harmonic of the 2m ham band falls in a national LTE band; horrible interfence from that wide open front end.

Now I finally understand why Apple is making more and more of chips and tech in house.

This chip has been a boon to SDRs. It moves the challenge of building an SDR to the filter banks and power amplifiers (the input and output conditioning circuits). Although these days most of the new transceivers have a low end in the 300Mhz range. It is somewhat easier to mix up the low frequencies into the 300+ Mhz range to cover them.

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clickbait title. not even a good analysis. i do like that the author wasn’t in any way complaining about the price or arguing that it wasn’t reasonable. in electronics (compared to drugs) there isn’t unfair pressure in the marketplace. so double phoo on the title.

i wonder if the new sds100 is built around this chip. timing is right.

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Drugs aren’t profitable if you can make money any other way.