Return on Investment of a Custom IC Development

Return on Investment for ASIC Integration

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What is the Return on Investment (ROI)
for a Custom ASIC Development?

If you have financial responsibility for an electronics project then you probably focus much of your energy on finding ways to reduce product cost and increase profitability. 

A custom integrated circuit (custom IC) is a proven way to achieve the following benefits:

  • Reduced Final Product Cost
  • Reduced Power Consumption – Reduced Battery Size – Improved Battery Life
  • Improved Reliability – Reduced Warranty Costs
  • Reduced Manufacturing Costs
  • Improved Intellectual Property Protection – Reduction in IP Theft or Cloning Costs

What is the Cost of Not Investing in Custom IC Development?

If you existing design is a printed circuit board (PCB) populated with discrete components then you have a cost basis for what it is currently costing your company to produce your existing or proposed product. 

The total cost of your current product includes more costs than simply adding up the cost of the discrete components and the PCB. 

The final manufacturing cost of your discrete PCB solution includes items such as:

  1. Bill of Materials (BOM) Cost of all components
  2. Printed Circuit Board (PCB) costs including additional costs associated with PCB size, PCB layer count & PCB special features
  3. Manufacturing assembly cost of each component (pick & place cost)
  4. Cost to procure a larger number of components
  5. Component and PCB inventory costs
  6. Battery or power supply costs associated with excess power needs of a discrete electronics solution
  7. Shipping costs associated with larger and heavier final assemblies
  8. Warranty costs associated with elevated failure rate due to a large number of discrete components
  9. Cost of intellectual property theft associated with the ease of reverse engineering or cloning a discrete electronics design

A Custom ASIC Can Deliver Significant Return on Investment

Converting an existing or proposed discrete design into a custom ASIC can often significantly improve your company’s profitability. For many projects the payback on the ASIC development investment can be recouped in months after production start with the new ASIC. 

Line Chart

Photo courtesy of Dmitry Baranovskiy(CC Attribution)

Determining If Implementing Your Project as an ASIC will Result in a Favorable ROI

Triad Semiconductor provides a business case analysis service to determine if your project and company would benefit from ASIC integration. In this analysis, Triad will work with you to:

  • Determine the true manufacturing cost of your existing product by analyzing the costs categories outlined above.
  • Perform an integration feasibility analysis to determine which components in your discrete design should be integrated into an ASIC
  • Provide you with a budgetary project report including: ASIC development NRE, ASIC production unit price at various production volumes and an estimate the time required to develop your ASIC and deliver production-ready devices.

ASIC ROI Calculator

Triad will also supply you with an ASIC ROI Calculator that will help us jointly model your current solution versus a proposed ASIC solution. The output of the ASIC ROI Calculator includes:

  • Break-even production volume
  • Time to break-even (recoup initial ASIC development investment)
  • Net Present Value Analysis (NPV)
  • Internal Rate of Return Analysis (IRR)

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