iPad's A4 processor carrying $1 billion pricetag?
updated 01:00 pm EST, Mon February 22, 2010
Modest dip into Apple's cash reserves
The A4 processor at the core of the iPad may have cost Apple as much as $1 billion to develop, says the New York Times. The newspaper notes that Apple is just one of several companies turning to ARM-based chip designs, including NVIDIA and Qualcomm. Even though the companies are contracting out their manufacturing to third-party sources, the billion-dollar ballpark for each company's work remains.
Adding a first-party factory into the equation can raise costs as high as $3 billion, the Times adds. The rush to produce ARM chips is believed to be related to the limitations of Intel's Atom processor. While common in netbooks, Atom hardware can also cost more than an ARM design, and simultaneously consume more power. Battery life is a particular concern for Apple, which has designed the iPad to both read books and watch video. It should in theory have a 10-hour life for functions like video.
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The Times pulled that number out of their arse. They said the cost to develop a CPU "from scratch" is typically around $1B. That's not what Apple did, however. Apple has instead licensed the ARM CPU, they purchased a chip design company (PA Semi) which already had CPU designs in the works, and they basically licensed components like graphics processors, memory controllers, and other I/O components and integrated them into a System On a Chip (SOC) design. This is a far cry from actually developing a new CPU from scratch. I'd be surprised if Apple spent half as much, and that's including the $278M they spent to buy PA Semi. The actual figure is probably closer to a third of the Times' guesstimate including this acquisition.