I was recently asked for an estimate of how much Qualcomm (NASDAQ:QCOM) charges for its lower-end Snapdragon 400 series processors. In a piece published on Fool.com last year, I calculated the average price of a Qualcomm Snapdragon platform was approximately $24. In the conclusion of the piece, I wrote that the higher-end Snapdragon 800 family of chips could fetch in the neighborhood of $30-$40 while the lower-end Snapdragon 400-series products likely came in at $10-$15 per platform.

I would like to do what is known as a "sanity check" on that last estimate. While it is difficult to find accurate values for many of the inputs that go into such an estimate, I don't expect to produce an exact cost; a reasonable estimate is fine.

Die size, wafer cost, and yield
The die size of a low-cost system-on-chip like the Snapdragon 400 is likely to be low. How low? Well, according to Chipworks, the Rockchip RK3188 processor built on Global Foundries' 28SLP manufacturing process weighs in at 25 square millimeters.

Now, the RK3188 doesn't integrate a cellular baseband processor, nor does it integrate other connectivity features. The Snapdragon 410 (Qualcomm's latest in the Snapdragon 400 family) apparently integrates GPS, the digital portion of the Wi-Fi solution, and the cellular baseband. It is also built on Taiwan Semiconductor's (NYSE:TSM) 28-nanometer LP process, which should be roughly equivalent to the Global Foundries' 28-nanometer process in terms of transistor density.

Given the added functionality, I'd guess the Snapdragon 410 is likely in the range of 40 to 50 square millimeters, or less than half the size of Qualcomm's high-end Snapdragon 800 processor, which Chipworks reports features a die size of 118 square millimeters.

For wafer cost, I will use Handel Jones' estimate that a 28-nanometer wafer costs about $2,600. From that, assume Qualcomm has to pay $5,200 per wafer (Taiwan Semiconductor's gross profit margin is about 50%). For yield, I will assume that since this is a very mature technology and a relatively small die, approximately 80% of the parts printed on the wafer turn out good.

What does the chip cost to make, then?
Using the Silicon Edge dies per wafer estimator, and using 45 square millimeters for the die size, I estimate Qualcomm gets about 1,354 dies per wafer, 1,083 of which are good. This suggests an average price of $4.80 per die. Add to that packaging and test, shipping, and the other less glamorous cost-of-goods sold, and I wouldn't be surprised if Qualcomm's cost were about $7 for the chip.

Now, low-cost chip vendor MediaTek saw gross profit margin of about 49% last quarter (up from 43% in the year prior), so anywhere from 40%-50% gross profit margin on Qualcomm's part for such chips seems reasonable.

A $7 manufacturing cost and 45% gross profit margin suggest a system-on-chip cost of about $10. The full platform is likely to be a bit pricier since Qualcomm would include the power management chip, wireless RF chip, and others, but I would be surprised if the pricing ceiling for the entire Snapdragon 400-series platform was not $20.