White Paper: Is an ASIC Right for Your Next IoT Product?

June 27, 2017, anysilicon

This whitepaper from Presto Engineering, Inc., looks at factors that determine potential benefits of an ASIC solution relative to a discrete alternative and discusses ways to reduce costs and increase value by managing risk and complexity.




Application specific integrated circuits (ASICs) are cheaper and easier to make than ever before and the range of applications in which they offer significant benefits is expanding rapidly. How can you know when an ASIC is the right solution for your problem? And what is the best way to produce one?


Almost every discussion about the potential benefits of an ASIC solution begins with a discussion of cost and complexity. Semiconductor manufacturing is notoriously expensive. With new fabs costing billions of dollars, economically viable products must have high prices, high margins and high volumes. It can easily cost half a billion dollars to bring an advanced-technology microprocessor to market, and costs for less ambitious projects can easily reach into the $10- to 100-million-dollar range. However, the cost landscape is changing dramatically. It is now quite possible to bring a new ASIC to market for less than $5 million dollars (USD). (Figure 1)


Figure 1 – Leveraging Legacy Fab Processes for Today’s IoT ASICs


As the industry has focused on developing cutting-edge manufacturing technology for the most advanced microprocessors, it has left fab capacity idle on older, more mature processes. At the same time, product designers have realized that there is significant market potential for smaller, more narrowly targeted circuits fabricated with this older, less costly manufacturing capability. While this trend started with large manufacturers of other types of products, such as automobiles, looking for specific solutions in relatively large volumes, it has now extended to include smaller scale, highly targeted solutions in unit quantities as small as a few tens of thousands, in applications ranging from medical devices to the Internet of Things (IoT).


The complexity of the semiconductor manufacturing process can be as prohibitive as its cost. The wafer fabrication process itself is arguably the most complex manufacturing process ever conceived, and that does not include additional aspects of the overall process, such as circuit design, the procurement of raw materials, testing, packaging, logistics, quality assurance, and sustaining engineering. (Figure 2)



Figure 2 – The Many Costs of the Semiconductor Manufacturing Process


Complexity can be considered as another side of cost – as it impacts both the cost of execution and the potential cost of misexecution. Assembling a team with the knowledge and experience to bring a new semiconductor product to market is expensive and time consuming, and the promised return on a large development investment can evaporate quickly if a delay allows a competitor to be first to market.


In what follows we will look at factors that determine the potential profitability of an ASIC solution relative to a discrete alternative, and discuss ways to reduce costs and increase value by managing risk and complexity.


ASIC vs. Discrete – Cost and Value

Often an ASIC development project begins as an effort to enhance an existing discrete solution – one comprising off-the-shelf components connected on a circuit board or, more recently, components combined in a package (system in package or SiP) that resembles an integrated circuit. The math involved in the decision to pursue an ASIC solution is simple: the most profitable solution will be the one with greatest difference between cost (fixed plus variable) and selling price. Typically, in comparison to a discrete solution, an ASIC has higher initial (fixed) costs and lower per unit (variable) costs. Since we are not talking here about capital investments in manufacturing facilities, the initial costs are primarily for non-recurring engineering, which includes the circuit design and customized tooling, such as photomasks, which are used to create the circuit. It is worth noting that both design and tooling costs are decreasing: design as reusable blocks of IP have become widely available, and tooling for less advanced processes.



In the current environment, the up-front investment for an IoT-type ASIC can be less than $5M. Three factors continue to push this cost down. Analog/mixed-signal devices do not require the extensive verification required for large SOCs, design tools required for mature process technologies (90nm and above) are affordable and fab NRE is dramatically less expensive.

The cost of mask sets for mature process technologies is much less than for more advanced nodes (Figure 3). The cost for a multi project wafer (MPW) to produce a few hundred prototypes can be as low as a few thousand dollars and a fully dedicated wafer (single layer reticle or SLR) comes in at just over $500K for process nodes down to 65 nm.


Figure 3 – The Cost of a Mask Set for Process Technologies


An example will serve to illustrate the business case for an ASIC vs. a discrete solution. Consider an existing discrete solution with a cost of $10 per unit at a volume of 500,000 units per year. The ASIC solution has an upfront cost of $4M, but the cost per unit is only $4 at the same volume. With a cost differential $6 per unit, saving $3M per year, the initial $4M investment will be paid back in less than 18 months. (Figure 4)


Figure 4 – Example of Manufacturing Costs for ASIC vs. Discrete Solution


It is equally important to consider the value side of the profitability equation. Anything that adds value ultimately increases profitability, whether that value is monetized directly in a premium price or has an indirect impact, such as increased customer loyalty or market share.


Areas where an ASIC may add value include:


Reduced size – for mobile and wearable devices especially, size reduction can be a critical requirement.


Increased security – is becoming a primary challenge in an increasing number of electronics applications. IoT devices not only store privileged data but can also be used to attack sensitive infrastructure. An ASIC, with embedded non-volatile memory and appropriate gate-keeping and cryptography, can support the most advanced security protocols by embedding root-of-trust items (keys, certificates, OSs), implemented in silicon by secure back-end operations.


Fitness for application – product designers want to optimize the performance of their products for a specific application. The functions and features they need may be unavailable off-the-shelf, or they may want to combine capabilities not currently available from a single supplier. An ASIC allows them to optimize performance to their own specifications and differentiate their products from their competitors’. Superior performance can command premium prices.


Barrier to entry – ASICs erect an effective barrier to competitor entry by raising initial investment requirements and making design IP more difficult to copy. Reusing designs that are in the public domain or residing in a design firm library can reduce design cost, but the savings must be weighed against the advantage of a proprietary and truly unique design that can be legally protected against copying.


Speed – faster is almost always better. In ASICS, shorter signal paths generate less capacitance and interference and generally permit significantly faster operation than an equivalent discrete solution.


Power consumption – battery life, and therefore power consumption, is a primary consideration for many IoT and mobile products. An ASIC’s small size and ability to run at low voltages allow it to operate efficiently at low power levels.


Reliability – an integrated circuit is inherently more reliable than its discrete equivalent with fewer points of failure in the manufacturing process and in the field.


Supply chain security – an ASIC solution can secure the supply chain against supplier changes, ensuring that critical parts are always available and eliminating the cost of designing and administering product modifications to accommodate changes in
component availability.


Clearly an ASIC can reduce costs and increase value, but how can a product designer best manage the complexity and risk of the semiconductor manufacturing process? It is useful to consider the overall process as divided into two phases – design and build. They are two very different disciplines requiring vastly different skill sets and knowledge bases. It can be compared to developing a modern building. Seldom does the same firm design and build a major project. Architects design, construction companies build.


A word about designs and designers. The semiconductor industry has focused for decades on digital designs for advanced microprocessors targeted at personal computers, and more recently System on Chips (SOC) for smartphones, servers and network infrastructure. Much of the growth potential for new products is at the edge of the network or in specialized products that combine multiple functions in a single circuit. IoT products, for instance, often combine an analog sensor, digital conversion and signal processing, power management, memory, security and radio frequency communication. However, these seldom require the manufacturing process technologies needed for data processing-intensive SOCs.

There is a great difference between optimizing and verifying a digital design for an advanced manufacturing process and perfecting a mixed signal (analog/digital) design that may benefit from being produced on an older process at larger geometries. Up to 80% of advanced SOC design effort goes into verification; more heterogeneous mixed-signal devices do not carry that burden, and can be designed on less expensive tool suites, since they use manufacturing processes with larger windows of operation and more mature yield models.


However, the mix of functions and technologies required by these new applications still poses a significant design challenge. There are many design resources available to a product developer, ranging from public domain IP to expert firms that specialize in one particular type of device.
The product developer will be well served to seek out a designer with specific expertise in the type  of device required for the application. An advantage of separating the design and build functions, over an integrated operation that includes both functions, is the freedom to choose design resources that are well adapted to the application(s) being served. We will see that the same consideration applies when choosing a firm to manage the production process – choose a firm with specific expertise in the areas that are most critical to the performance and success of your device.


Managing Complexity and Risk

The electronics market waits for no one. Being first to market with a new product allows the manufacturer to collect a price premium and capture market share. Historically, the leading semiconductor companies have built their success on being first to market with the latest performance-enhancing innovations, time after time. Now we are looking at a market where many of the most significant growth opportunities will be in specialized segments. They will require application specific products that will be conceived and produced by companies that are not primarily semiconductor manufacturers but makers of cars, or medical devices, or smart building appliances, or industrial systems, or something else no one has thought of yet. How are these product developers to confront and master the complexity of the semiconductor manufacturing process?


Until recently, such a task required the assembly of a team of experts, each with expertise in a different part of the process. The design might be created in-house or through an outside firm, and large companies, like automotive manufacturers, might assemble whole organizations, often called “operations” departments, with the sole task of managing the production of the specialized devices they needed. For a small company, with a game-changing new product idea, the cost and delay of assembling such a team can be fatal. If a competitor beats you to market you might not get a second chance.


This need for manufacturing expertise led to the creation of “outsourced operations” companies that can manage the entire semiconductor manufacturing process from the completion of the design to the delivery of the tested product. By reducing the risk, cost, and difficulty of the production process, these companies are playing a key role in accelerating the proliferation of application specific semiconductor solutions. (Figure 5)



Figure 5 – Benefits of Outsourcing Operations


Reduce risk –by outsourcing these operations, you gain from the management and technical experience of a team of experts with well-established relationships to resource and service providers.


Get to market faster – maximize margins and return on investment by commanding premium prices. Take valuable market share and establish a strong competitive position. Avoid delays required to assemble experts for an in-house team.


Minimize start-up costs – reduce capital expenditures: The IT infrastructure alone – enterprise resource planning (ERP), manufacturing execution system (MES), disaster recovery planning (DRP), and security – needed to manage a semiconductor production operation can cost a million dollars. Outsourcing operations converts fixed costs to variable, minimizes headcount and avoids the dilution of equity required to recruit top talent.


Optimize production processes – separating the design and build functions brings the freedom to outsource operations to a service provider with experience and expertise that best match the product’s requirements. Outsourced operations can match the device requirements to the best fabrication process to ensure optimal performance at the lowest cost. And after wafer fabrication, different technologies still require different skill sets. Secure devices must be produced in secure facilities with secure communication protocols. Radio frequency testing, especially in the millimeter wave bands that are now coming online, is still as much an art as a science, requiring specialized knowledge and, frequently, customized fixturing.



ASICs offer superior value and performance. The availability of less expensive fab capacity on mature process technologies has significantly reduced their cost – it is now possible to design and build an ASIC for about $5 million – and increased the applications space in which they provide an economically attractive solution. Product designers who want to develop an ASIC solution are well served to separate the design and build phases, choosing both designer and builder for their specific expertise in the technologies critical to the success of the product. Outsourcing operations to build the ASIC allows product developers to reduce costs, increase value and minimize risk.


Outsource your operations for your next ASIC to Presto Engineering Inc.


Presto Engineering Inc. provides secure semiconductor operations to IoT companies that need low-risk productization, accelerated time-to-market and fast volume scaling. Serving companies from small start-ups to large corporations, Presto provides comprehensive outsourced production from tape-out to delivery of finished goods. Its proprietary, highly-secure (EAL5+/6) provisioning solutions can be tailored to customers’ needs. The company has a long history of security success and supports 6 facilities that are home to more than 100 experts
in the US, Europe and Asia. For more information, visit:


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