There are a number of different cost factors associated with RF development that are not incurred if a module is used. In the following analysis it is assumed that the developers would already have access to the necessary RF measurement devices (Spectrum and Network Analyzers), but additional compilers or software tools would be needed. The development and BOM costs associated with the chip have been underestimated in order to represent a realistic comparison.
Associated costs:
- Estimated BOM Costs
- Cost of Tools
- Cost of Certifications
- Manufacturing Costs
- Development and Opportunity Costs
The following graphs illustrate the comparative cost between three different scenarios.
Costs with all Certifications
The data includes all tool costs, certifications for the U.S., Canada and Europe as well as China (estimated), Japan and Korea. The module cost used for the data was $16.50, which is above the current list price for 1,000-9,999 pieces. As the graph indicates, the costs associated with a customer developing his own chip solution do not overtake the module until approximately 8,000 pieces.
U.S. Development Costs
This data assumes the customer has all RF test equipment and an experienced engineer on staff. It includes the costs of FCC and CE certifications and development costs of a single engineer for four months at $35,000. The chip development does not overtake the module costs until approximately 10,000 units. We feel these are low-end estimates, as a typical U.S. customer will need to spend significantly more on time, equipment, back-end firmware and support.
All Costs
All costs were included in this graph with the exception of future maintenance of firmware, etc. Those costs should be more intensive on the chipset vs. the module. The data includes the opportunity cost associated with the possible amount sales that would have been realized during the four months of development. The cost was based on four months of development time with a 10,000 EAU at a 30% gross margin. The chip does not overtake the module until over 13,000 pieces. In reality the slope of the module curve would flatten out at 10,000 units due to a price break at those volumes, further narrowing the gap between the chip and the module.
