Cost to develop advanced 2nm processor from scratch will be over $700 million

Chip design costs started skyrocketing with the advent of FinFET transistors back in 2014 and have become particularly high in recent years due to the introduction of 7nm and 5nm process technologies. International Business Strategies (IBS) recently published its cost estimate for developing 2nm chips using traditional methods. According to them, the development of a large 2-nm chip will cost $725 million.

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The lion’s share of the costs, according to IBS, falls on the development and debugging of software for chip design — approximately $314 million for the software itself and about $154 million for verification. These figures reflect the cost of developing a rather large 2nm chip by a company that has no previous development experience and is forced to go through all the stages from scratch.

The cases when a startup could develop a huge project (for example, Graphcore) are extremely rare. Most start-up companies take on much smaller developments. Most of the project uses licenses, so only the added intellectual property needs to be developed and verified. And of course, these companies don’t spend $724 million on a chip or platform simply because they don’t have the resources.

It would seem that large companies with vast engineering experience, software and resources also do not require such a global investment in the development of a new chip. However, they tend to invest hundreds of millions or even billions in platform development. For example, when Nvidia develops new product lines, it spends a lot of money on microarchitecture development, and then on the physical implementation of the chips.

Image Source: IBS

IBS Expert Opinion assumes traditional chip design methods without the use of AI-enabled design automation tools and other advanced software, which in theory can significantly reduce development time and costs.

In doing so, these scores highlight the importance of AI-enabled chip design tools from Ansys, Cadence and Synopsys and confirm that it will be next to impossible to create an advanced chip without the use of AI software in the near future.

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