Apple iPad Chip Likely Cost About $1 Billion to Create

A New York Times article discussing the semiconductor industry estimates that Apple likely spent about $1 billion to create its chip.

Apple, Nvidia and Qualcomm are designing their own takes on ARM-based mobile chips that will be made by the contract foundries. Even without the direct investment of a factory, it can cost these companies about $1 billion to create a smartphone chip from scratch.


The article goes on to say that the iPhone's success has driven a surge of interest from several big chip companies — each trying to put its own stamp on the same basic design for mobile chips — to compete against Intel, the dominant maker of PC chips

"Apple was the first company to make a really aspirational device that wasn't based on Intel chips and Microsoft's Windows," said Fred Weber, a chip industry veteran. "The iPhone broke some psychological barriers people had about trying new products and helped drive this consumer electronics push."

Intel believes its manufacturing expertise will allow it to produce a new crop of chips every 18 months or so that will be cheaper and use less power. Robert B. Crooke, the Intel vice president in charge of the Atom chip, says that as rivals shift to more cutting-edge chip-making techniques they are likely to run into problems that Intel solved years ago.