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What are the tradeoffs between general purpose ICs and special purpose ICs

General purpose ICs, also called Commercial off the shelf (COTS), are cheaper but in general:

compromise performance in some way

run slower and/or
use more power and/or
are much larger (including boards and supporting circuits)

aren’t as secure

don’t give you a competitive edge

require customization (programming, external board design)

Special purpose ICs, also called Application Specific ICs (ASICs), require a design effort whose cost needs to be spread over the expected volume of parts required.

It’s difficult to create a viable ASIC for markets smaller than a few million dollars. You can create a design for a few hundred $k and get prototypes for less that one hundred $k on a multi project wafer (MPW) run.

You will usually need to iterate the design and remember that design also includes a test regime and packaging. Having said that, if the market is large enough, an ASIC will usually outperform any COTS solution in its niche application.

It will thus create a significantly higher barrier to entry for competitors. (They won’t be able to just go into the lab and solder together a copycat board.)

Mostly cost. The volume of general purpose ICs is enormous, with many competitors that drive the cost down. The opposite is for special purpose ICs. But if the special purpose IC replaces a great quantity of general purpose ICs than economically it would make sense. An other matter is the MTBF, more components are used and lower is the MTBF of the total. In a nut shell it is a compromise between, cost, MTBF and sourcing complexity (assuming specification equivalency).

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