Intel chips cost $40 to make - report

And have done for three years, apparently

hands waving dollar bills in the air

It's not hard to see how Intel makes its money. According to market watcher In-Stat, the chip giant's average cost per die is a mere $40 - significantly less than it the prices it attaches to its processors.

That figure, the researcher calculates, has remained consistent over the past two years and will continue through 2005. This despite rising fab and materials costs.

In part, Intel has been able to maintain the cost per die by moving to 300mm wafers and by aggressively adopting new, smaller fabrication processes. According to In-Stat, Intel leads the market in manufacturing process development and fab capacity. It noted the chip giant will have four 65nm fabs ramping up output volumes next year. By contrast, AMD has a single 65nm fab, currently in development. The Dresden, Germany plant is its only facility capable of handling 300mm wafers.

Still, AMD is broadening its capacity through foundry deals - Chartered Semiconductor will also be pumping out 65nm, 64-bit AMD processors - and, more importantly perhaps, working with other chip vendors to develop future process technologies and this spread the cost.

In-Stat reckons Intel is one of a small number of chip makers who can do this kind of work on its own. But its aggressive adoption of new process technologies - which led to $1bn worth of savings in manufacturing costs last year - must not lose momentum, the researcher tacitly warned.

To be fair to Intel, while its mainline x86 chips can run as high as $999, and Xeons and Itaniums can cost the equivalent of a decent second-hand car, it has plenty of parts on its mainline processor price list in the sub-$100 price bracket. That's not even taking into account older designs that have been adopted for the embedded processor market.®