While the initial reason for designing a semi-custom or custom IC is to reduce cost (as well as maybe size and power consumption), for products manufactured in the UK or Europe even an integrated circuit costing more than the parts it replaces can produce a cost saving! The simple reason is that components can cost more to place than the cost of the components themselves.
Often companies are paying 5p to place a 2p component. By the time you have a few dozen components, even cheap ones, the cost can be significant. For example, a dozen transistors and two dozen resistors will probably cost less than £1. However the cost of placing them on the board might be nearer £2 bring the total cost to £3. Replacing it all with a custom or semi-custom IC could halve the total cost, even if the chip cost more than the individual components.
An example of a simple IC is shown below. This Zetex 700 series array provides automatic control of LED brightness over a 1400:1 range with just three external components – a photodiode, LED and capacitor. Additionally, the peak LED current can be set with one time programming (OTP) by on-chip fuses. The circuit can operate at just 1µA total current with the LED illuminated at low duty cycles. A shutdown mode drops the current to leakage values.
Two control pins allow the chip to be controlled using a digital circuit or microcontroller to further extend the brightness operating range and to provide manual brightness operation and remote shutdown.
All of this could be done with discrete circuitry but the cost would be considerably higher than the semi-custom IC even in modest quantities.
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