Research firm In-Stat believes that it costs Intel Corp. about $40 in average to produce a single die, despite of the fact that equipment involved into manufacturing has become more expensive since 2003. The analysts claim that Intel’s manufacturing strength is preeminent and this allows the world’s largest chipmaker to save money.

“As other semiconductor manufacturers turn towards partnerships for developing new process technologies and manufacturing capacity, Intel is one of the few vendors that can continue to push ahead alone and uses its technology and capacity as a competitive strength,” says Jim McGregor, In-Stat analyst.

Intel currently has three 90nm fabs, and will have four 65nm fabs, including one retro fit and one 90nm conversion, ramping in 2006. The transition to 65nm process technology, which is about to begin with first revenue shipments scheduled in Q4 2005, is also likely to boost Intel’s strengths. In fact, according to the high-tech research firm, Intel wants to move the entire product portfolio to a single process technology with its transition to 65nm.

“In 2004, with a strong transition to the 90nm process node and 300mm wafers, Intel realized an estimated savings of $1 billion in manufacturing costs,” Mr. McGregor said.

Despite the rising cost of fabs, mask sets, and in some cases, the die size, Intel’s average manufacturing cost per die will remain relatively constant at approximately $40 during 2003-2005, In-Stat reports. Even though Intel’s thinner manufacturing technologies allowed the firm to shrink die sizes, it added cache and functionality to its chips, which also increased die sizes. For instance, die size of Intel Northwood core is 131 square millimeter, die size of Intel Prescott processor is roughly 112 square millimeters, while Intel Prescott 2M chip has die size of 135 square millimeters.

Still, an average cost of a die is not necessarily an indicator of average manufacturing cost of a processor, as final products need to be tested, qualified and packaged. Additionally, given that Intel makes Itanium 2 chips with billions of transistors as well as tiny network controllers, which cost difference is may be in thousands of dollars, average cost does not show much.