High-end processor economics

Developing new, high-end CPUs is a very costly proposition. Both the logical complexity (needing very large logic design and logic verification teams and simulation farms with perhaps thousands of computers) and the high operating frequencies (needing large circuit design teams and access to the state-of-the-art fabrication process) account for the high cost of design for this type of chip. The design cost of a high-end CPU will be on the order of US $100 million. Since the design of such high-end chips nominally takes about five years to complete, to stay competitive a company has to fund at least two of these large design teams to release products at the rate of 2.5 years per product generation.
As an example, the typical loaded cost for one computer engineer is often quoted to be $250,000 US dollars/year. This includes salary, benefits, CAD tools, computers, office space rent, etc. Assuming that 100 engineers are needed to design a CPU and the project takes 4 years.
Total cost = $250,000/engineer-man_year X 100 engineers X 4 years = $100,000,000 US dollars.
The above amount is just an example. The design teams for modern day general purpose CPUs have several hundred team members.
Only the personal computer mass market (with production rates in the hundreds of millions, producing billions of dollars in revenue) can support such a large design and implementation teams.[citation needed] As of 2004, only four companies are actively designing and fabricating state of the art general purpose computing CPU chips: Intel, AMD, IBM and Fujitsu.[citation needed] Motorola has spun off its semiconductor division as Freescale as that division was dragging down profit margins for the rest of the company. Texas Instruments, TSMC and Toshiba are a few examples of a companies doing manufacturing for another company's CPU chip design.