Hey, can someone more knowledgeable explain to me how are companies, such as MediaTek, able to sell processors for ~$4?
For example, I looked at my local offers and the cheapest new, off-contract, fully-unlocked cell phone with 2 years of warranty costs $14.99. It's the Freeman Speak T120 feature phone. It has 2G connectivity, dual-SIM capability, 32MB ROM, 24MB RAM, microSD card slot (up to 8GB), 1.8-inch TFT display, Bluetooth, 0.8MP camera, 600mAh removable battery, no bloatware and a MediaTek 6261M 360Mhz CPU.
Since everyone along the line is making a profit, albeit small, and we subtract the cost of the parts which are not on the MediaTek SoC, such as the camera, battery and the shell/case of the phone, it means that we could guess that MediaTek is probably charging between $0.90 and $7 for their SoC, which includes 24MB of RAM and a 360Mhz processor. I remember not so long ago, let's say 25 years, that those parts would've cost more than $1000. How are companies, such as MediaTek, able to develop and produce them so cheaply?
Does the cost of developing a CPU mainly involve research and development, but after you're done with that part and have patented your CPU, all it takes to produce it is the price of the parts, labour and other manufacturing costs, such as renting the machines to do it? If this is indeed the case, then how come companies like Intel have pretty much always charged upwards of $40 for their CPUs?
Please, those of you, who I know have been into computers for many years, help me understand; I will be greatly appreciative if you did!
Here's the device.
Edited by Just_One_Question, 19 August 2017 - 06:05 PM.