You are trying to figure out whether to build a new fabrication facility for you

Question

You are trying to figure out whether to build a new fabrication
facility for your IBM Power5 chips. It costs $1 billion to build a new fabrication
facility. The benefit of the new fabrication is that you predict that you will
be able to sell 3 times as many chips at 2 times the price of the old chips. The new
chip will have an area of 186 mm2, with a defect rate of .7 defects per cm .
Assume the wafer has a diameter of 300 mm. Assume it costs $500 to fabricate a
wafer in either technology. You were previously selling the chips for 40% more
than their cost.What is the cost of the old Power5 chip?
b. [20] <1.5> What is the cost of the new Power5 chip?
c. [20] < 1. 5> What was the profit on each old Power5 chip ?
d. [20] <1.5> What is the profit on each new Power5 chip?
e. [20] <1.5> If you sold 500,000 old Power5 chips per month, how long will it
take to recoup the costs of the new fabrication facility?

Explanation / Answer

Dies per wafer = pi8(30/2)^2/3.89 - pi830/(2*3.89)^0.5 = 182 - 34 = 148 yield = [1+ (0.3*3.89)/0.4]^-4 = .36 Cost per die = 1000/(148*.36) = 18.77 dollars chip cost (old)= 18.77 + 20 = 38.77 dollars die per wafer = pi*(300/2)^2/186 - pi8300/(2*186)^.5 = 389-49 =331 die yield = 1 * [1+ (0.007*186/4)]^-4 = 0.32 (b)die cost = 1000/(331*.32) = 9.44 dollars chip cost(new) = 9.44+20 = 29.44 dollars (c)selling price(old) = 38.77*(1+40%) = 54.28 dollars profit = 54.28-18.77 = 35.51 dollars (d)selling price(new) = 54.28*2 = 108.56 profit = 108.56-29.44 = 79.12 dollars (e) 1*5*10^9/[(79*12/2)*(5000*3)] = 25.28months

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