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Frequently Asked Questions
Historically companies that reach a certain shipping volume figure out that they could do some smart integration of the electronics on their board and save big money doing it. This also provides them with a more reliable manufacturable product and get to design things just the way they like them. But these System companies themselves don’t design chips. Some eventually do design key parts of the system such as the SOC, but most don’t. So they go talk to chip Suppliers to get some custom chips made, but they soon realize that to manage a chip Supplier successfully you need to really understand what they do, and the chip Suppliers don’t fully understand how system development works so they need some really specific guidance to come up with a plan that will best support the System development. This is how the silicon management field was born, and usually a silicon manager will come from a chip development background and work at a system company for a while therefore mastering both types of development which enables him to drive the program both logistically and technically.
Let’s explore an example. Acme electronics is shipping on average 6 million units per year, and product life is about 4 years. They pay about $2 for the electronics with their current discrete design, but they have determined by talking to some chip Suppliers (or determining estimated chip cost using commercially available calculators) that they can get one chip that can do all the things they need for $1. They engage with a Supplier that tells them they will design the custom chip for them for an NRE payment of $3 Million USD in three payments: $1 Million USD at kick off, $1.5 Million USD at tape out and $0.5 Million USD when the component is qualified for mass production. So Acme electronics needs to pay up front $3 Million USD, but they will save $1 in every unit they ship. So after they ship 3 Million systems they will recover their custom chip development NRE investment, and from then on out every system they ship will give Acme electronics $1 extra dollar of profit. Since they will sell 24 million systems during the product’s lifetime, after deducting the $3 Million USD spent on NRE, Acme electronics makes $21 Million USD of profit. So the ROI for them was = 21 Million USD/3 Million USD = 700%
The catch is that when you engage with chip Suppliers to make custom chips you really need to understand how to drive that whole engagement to be able to get what you need when you need it. There are three main areas that you will need to know well and drive: engineering/silicon management, commercial/GSM and legal. By being able to drive all three aspects of custom chip development you will be able to mitigate the main risks that arise when you take the custom chip path instead of buying off-the-shelf.
No. Our objective is to be the facilitator and interpreter between the system Company and the chip Company. We don’t design chips ourselves. We like to go find chip design teams that are excellent and then drive them to deliver a system Client’s desired custom chip.
The website is owned and operated by Digital Papaya Inc., a Puerto Rico domestic corporation.
The typical Client is a company that develops and sells systems. Our role is to pursue the best interests for the system company Client, and we integrate with the teams at the system Company as much as possible to drive the custom chip development with chip Suppliers on behalf of our system company Client.