Why are ATMega's so overpriced ?

[michaeliv]

Hi,

I'm new to the world of microcontrollers, just starting out with the Arduino.
Looking around DigiKey, I somewhat noticed that the most popular chips used in the Arduino(AtMega's) are significantly overpriced when compared to the competition. I would expect the exact opposite - since the Arduino is so popular, Atmel should be able to sell them cheaper due to sale volume.

Here is what I mean (Qty 10 - Flash / RAM / IO)
Cheapest 16kb Flash:
$2.65 ATMEGA168A-MURCT-ND 16kb 1K 22IO
$1.15 - MKE02Z16VFM4 16kb 2K 28IO (Extras : 12b ADC <vs 10b>, 12b DAC, 2x max freq)
$0.95 MKL03Z16VFK4  16kb 2K 22IO (12b ADC<vs 10b>, No EEPROM)

Cheapest with USB:
$5.84 ATMEGA32U4-AUR 32kb 2.5K 26 IO
$2.80 R5F10KBCAFP#V0 32kb / 5.5K 22IO
$3.34 ATXMEGA32C4-MHR  32kb / 4k / 16IO
$1.47 EFM8UB20F32G-A-QFN32 32kb 2.25K 25 IO (No EEPROM)
$0.82 EFM8UB10F8G-B-QFN20 8kb 2.25K 13IO ( No EEPROM/Less Flash/ RAM/ IO)

The above scenarios weren't cherry-picked, this seems to be the general trend for all AtMega chips, for every configuration there exists a close enough equivalent that is at least half the price.
Even AVR's AtxMega chips are significantly less for same given specifications.
What am I missing here ? Is there something extra that they offer that I don't know enough to appreciate ?
What's the difference between the AtxMega and AtMega series ? Can you run the same code on both ?
If the AtMega chips are so overpriced for no significant reason, why did Arduino choose to go with them / didn't drop them when better alternatives became available ?

Thanks!

[coppice]

Looking around DigiKey, I somewhat noticed that the most popular chips used in the Arduino(AtMega's) are significantly overpriced when compared to the competition. I would expect the exact opposite - since the Arduino is so popular, Atmel should be able to sell them cheaper due to sale volume.

The total sales of all Arduino's to date is a small splash in the ocean for an MCU maker. I'm sure Atmel like the attention they get from the Arduino, and they'll certainly be very happy if it leads to high volume design ins. However, the actual sale of ATMega chips into Arduinos will barely register in Atmel's sales mix.

[michaeliv]

I like DK for some stuff but they are pretty expensive. I don't have time to do a direct comparsion of all your chips but here is the first one on your list.

http://www.newark.com/atmel/atmega168a-mu/microcontroller-mcu-8-bit-atmega/dp/68T2703

$1.51 US quantity 1k; &1.89 quantity 1

DK is good for their search engine and variety but once you get the hang of Newark its almost always cheaper usually significantly so.

I'm asking more about the reason why they are more expensive, I realize that they will be cheaper at other shops / in higher quantities, but so will the rest of the chips I'm comparing them to.

[coppice]

I like DK for some stuff but they are pretty expensive. I don't have time to do a direct comparsion of all your chips but here is the first one on your list.

http://www.newark.com/atmel/atmega168a-mu/microcontroller-mcu-8-bit-atmega/dp/68T2703

$1.51 US quantity 1k; &1.89 quantity 1

DK is good for their search engine and variety but once you get the hang of Newark its almost always cheaper usually significantly so.

I'm asking more about the reason why they are more expensive, I realize that they will be cheaper at other shops / in higher quantities, but so will the rest of the chips I'm comparing them to.

Er, no. Small volume prices are more or less random numbers. Ask for 10k per month on a rolling contract and you will just start to hit the lower rung of the sane price ladder. For handfuls of devices look around. Some sources may be far cheaper than others.

[john_p_wi]

Doesn't Newark have an obscenely high handling fee of 20 USD if your order is under 100 USD?  IF the op is looking for <20 pcs than that will have to be taken into account...

[c4757p]

The low-volume AVRs vary a lot in price, too. I was just going to point out that the atxmegas are often, contrary to what you'd expect, significantly cheaper than equivalent atmegas (the key being 'equivalent', as the range goes much higher at the high end) - but I went to look up the price, and they weren't anymore!

coppice is definitely correct about the prices being arbitrary...

[tszaboo]

Qty 10

Ther is your answer. Look at FPGA prices, that is even more insane. The 5AGXMA3D4F27C5N was used on the Nvidia G-Sync first version module. Module was sold for 120 USD, cost of the FPGA, 1 QTY is 530 dollars.
As I understand the atmegas sold in china are something like 50 cents. Basically if you can buy something from digikey stock, you are not buying enough to be called a big customer.

[LabSpokane]

It's worth noting that Digikey's whole raison d'etre is to service design engineers and hobbyists (how DK started in the business).  Mouser, Newark, etc are similar service models. 

Things get better at places like Arrow, but you're buying in reel quantities. 

The virtue of doing business with the above companies is that *you can even buy small quantities of parts at all*.  I always get my little orders within a couple of days without complaint.  These are simply the margins that need to be charged with orders in the $20-$250 range. 

[SharpEars]

Qty 10

Ther is your answer. Look at FPGA prices, that is even more insane. The 5AGXMA3D4F27C5N was used on the Nvidia G-Sync first version module. Module was sold for 120 USD, cost of the FPGA, 1 QTY is 530 dollars.
As I understand the atmegas sold in china are something like 50 cents. Basically if you can buy something from digikey stock, you are not buying enough to be called a big customer.

The atmegas from China are fakes not made by Atmel. China counterfits just above every piece of non-ridiculously complex silicon (like CPUs).

[Chris C]

Doesn't Newark have an obscenely high handling fee of 20 USD if your order is under 100 USD?  IF the op is looking for <20 pcs than that will have to be taken into account...

Maybe, but I always check their sale prices before finalizing my order.  50% off Deoxit?  Multiturn trimmers for $0.10 to stock the parts bin?  My orders have always easily ended up more than $20.  And on the intentionally large orders, I appreciate both that they're generally cheaper across the board, and print detailed specs on the invoices in a format that can be cut out and used as labels on my own part organizers.

As to the OP's question, yes, Atmel is noticeably more expensive than competitors at hobbyist quantities.  The success of Arduino did nothing to change that.  Maybe they're cheaper to produce now, but that savings doesn't have to be passed along to hobbyists, when they will buy what they're familiar with regardless of price.  Microchip would have been a more logical choice for Arduino to go with from a strictly hardware standpoint, due to price/capability and more selection in DIP packages.  But the Microchip software and development tools precluded that.

[michaeliv]

I've checked prices for ~1k quantities and they appear to scale( the chips are cheaper, but they are all cheaper by about the same factor ) - ATMega's are still significantly more expensive.
And I don't understand why some chips would be more expensive than others in hobbyist quantities. DigiKey has 11k of ATMEGA32U4 in stock, which means they ordered around 20-30k. For that quantity they would get close to the minimum price that Atmel would sell them for.
And assuming that Atmel isn't hobbyist-pricing-friendly, that does't explain why AtMega's are 2x more expensive than AtxMega's.

The atmegas from China are fakes not made by Atmel. China counterfits just above every piece of non-ridiculously complex silicon (like CPUs).

Do you have more info / link on that ? Did they somehow get / clone the architecture or they reverse engineer it ?

[retrolefty]

I've checked prices for ~1k quantities and they appear to scale( the chips are cheaper, but they are all cheaper by about the same factor ) - ATMega's are still significantly more expensive.
And I don't understand why some chips would be more expensive than others in hobbyist quantities. DigiKey has 11k of ATMEGA32U4 in stock, which means they ordered around 20-30k. For that quantity they would get close to the minimum price that Atmel would sell them for.
And assuming that Atmel isn't hobbyist-pricing-friendly, that does't explain why AtMega's are 2x more expensive than AtxMega's.

The atmegas from China are fakes not made by Atmel. China counterfits just above every piece of non-ridiculously complex silicon (like CPUs).

Do you have more info / link on that ? Did they somehow get / clone the architecture or they reverse engineer it ?

 I too have heard of counterfeit chips and semiconductors, but haven't read of either PIC or AVR getting 'cloned'?
I have heard of china getting a 'benefit price' on over-runs and extra-shift shadow operations. Not unlike the 'gray market' available in the US.

[unitedatoms]

Why are ATMega's so overpriced ?

If those parts are old models, then I'd think it is not manufacturer's fault, but warehouses decision.

One guess can be that warehouses know something that customers do not know. For example if I was a warehouse with stock and observed the trend of decline in sales for ATmega, I'd decide to prepare to obsolescence of the parts and turn them into "final stock, which will never be replenished - end of life stock". There is no official end of life announced by manufacturer may be, but from historical point, all DIP chips of every manufacturer can automatically be classified as "end of life" stock.

For this kind of stock the warehouse may just never worry about sales growth and switch prices higher to get may be even artificially reduced sales but with much higher price.

The reason I think so is my observation of ATmega 2560 chips being sold on AliExpress relabeled. I was alarmed when saw a signs of older label sanded off under late label with week 20 of year 15. The older scratched off label was visible only under microscope when chip was drying after flux remover liquid. IT appeared only for few seconds and became invisible after chip was clean and dry.

I have got my device working with no any problems, but that made think about how much it costs to someone to relabel chips, and why is it needed. I understood that the goal of relabeling was not to fake the chip, but to hide the fact that chip is very old stock, so the oxidation can make the batch inattractive for automatic reflow.

I am doing the reflow manually, so do not care if chips are a bit old, as long as the price is good. I also can not blame the shop, I used on Aliexpress, because most likely the seller has no clue what Atmega is, what to look at on the chip, and why people are buying it. I mean the shops themselves are most likely being fooled by their suppliers.

[Kleinstein]

The classic AVRs are still made in a 5 V capable process. They are also quit tolerant to variing supply - thus can often run directly from battery without regulator. So they are relatively robust, can drive 5 V outputs, but also get rather expensive if large amouts of memory are included. So the AVRs are good at something like a MEGA48 or tiny25, but a Mega1280. Mega328 or similar are quite expensive in comparision. Here the 3.6 V max Xmega series is often cheaper even though they include 12 Bit ADC and other goodies.

Other modern chips (e.g. ARM based) may have 5 V tolerant inputs but usually don't have 5 V capable outputs.

[eas]

Hi,

I'm new to the world of microcontrollers, just starting out with the Arduino.
Looking around DigiKey, I somewhat noticed that the most popular chips used in the Arduino(AtMega's) are significantly overpriced when compared to the competition. I would expect the exact opposite - since the Arduino is so popular, Atmel should be able to sell them cheaper due to sale volume.

Ardunio is a small portion of the overall AVR market.
Arduino portion could be defined as:

• AVRs on arduino and arduino clones/licensees.
• AVR in products that started out on the above.
• AVR sold in small quantities to hobbiests and those who are taking the step to #2, above).

#1 & #2 aren't buying from digikey at the quantity 1 price. #3 is going to be small in relationship to #1 + #2.  Say AVR for Arduino is (generously) 10% of AVR market, and #3 is (generously) 10% of Ardunio segment. That only works out to 1% of overall AVR market. Not going to drive economies of scale.

Moreover, economies of scale for manufacture and distribution aren't the same as economies of scale for retail. In fact, it may be that the popularity of Arduino increaces the average cost to a retailer like DigiKey of each AVR they sell. Consider that a hobbiest may order less frequently than a design engineer, and that when they do, they may order smaller quantities of AVR, and fewer other components too. So, cost to sell AVR on average will be higher than that of a similar MCU that is only purchased by design engineers.

Finally, in the short term, and absent economies of manufacturing scale and/or competitive pressure to take lower margins, classical economics would predict that greater popularity would lead to higher prices, not lower prices.

Even with competitive pressure and economies of scale, increased sales volume doesn't always result in lower prices. There may be production constraints due to limited supplies of raw material, or cost of capital to fund production expansion. Also, most products doesn't exist on their own. They are part of a larger product line, and/or the overall business. Chicken wings, flank steak and beef brisket used to be cheap because they were less-desirable byproducts of producing popular items like chicken breasts, drumsticks,  top sirloin or fillet mignon. The Ford Focus was cheap because it helped Ford meet corporate fuel-economy standards while selling lots of Expeditions. Phone/Tablet oriented intel CPUs are relatively cheap because they help intel amortize the fab investments needed for their Xeon and Core CPUs to command the prices they do.

[fivefish]

I'm asking more about the reason why they are more expensive,

It's simple. Pick one or all.
- greed
- maximizing profit (don't leave money off the table)
- what the market is willing to pay (in this case, market is/are the newbies/arduino crowd)
- supply and demand (little supply, lots of demand for these arduino chips)

Obviously, an EE designing a product for mass-market for several thousand or million quantities would not pick an ATMEGA168/328/whatever "arduino" chip for the job. There are other better/cheaper/more advanced/more simpler/more powerful/less powerful chips to do the job.

[mikeselectricstuff]

Newer chips are cheaper because new parts use smaller processes so they get more die per wafer
The Arduino thing has if anything kept prices higher, as a lot of people use AVRs because it's what they know (or because they don't know any better), so the chips don't need to be priced competitively with newer, more capable parts.
 

[MarkM]

I've been using some Atmega328p-au from Aliexpress with zero issues for 6+ months.  I pay $1 each shipped.  I also found the SMT32 arm cortex m3 on there for around $1.75 shipped. 

[MarkM]

I'm very careful about what I buy from China, though.  MOSFETs, for example, I wouldn't chance it. 

[amyk]

This is an 8051 with 16K flash + 2.25K RAM and 16 I/O in $0.91 single quantities:

http://www.digikey.com/product-detail/en/EFM8BB21F16G-B-QFN20/336-3167-5-ND/5115724

The version with 22 I/O is $0.96:

http://www.digikey.com/product-detail/en/EFM8BB22F16G-B-QFN28/336-3169-5-ND/5115726

The Arduino thing has if anything kept prices higher, as a lot of people use AVRs because it's what they know (or because they don't know any better), so the chips don't need to be priced competitively with newer, more capable parts.

This. It's the same reason why you can find other parts like LCD modules or GPS on hobbyist sites often priced several times higher than the exact same product somewhere else - just because it has the word "Arduino" in the description or title. I call it the "Arduino tax", although "Adafruit tax" and "Sparkfun tax" are also valid.

[SharpEars]

I'm very careful about what I buy from China, though.  MOSFETs, for example, I wouldn't chance it.

Voltage regulators >1A, no deal!

[TheElectricChicken]

I'm asking more about the reason why they are more expensive,

It's simple. Pick one or all.
- greed
- maximizing profit (don't leave money off the table)
- what the market is willing to pay (in this case, market is/are the newbies/arduino crowd)
- supply and demand (little supply, lots of demand for these arduino chips)

You forgot people being far too stupid to care what the price is. That's popular. Just buy 10 from China for the same price as one local part, then see if 3 "will blend", if 3 like the microwave, and if three work better after being pounded with a hammer. Then you'll still have saved money and had fun and have your circuit.

If you pay high price and blow it up you go 'arrrgghhh'. Don't get too attached.