This study gathers data information from 38 listed and OTC IC Design firms in Taiwan during the period from 2001 to 2005. We adopt Battese and Coelli's 1995) model of stochastic frontier function to evaluate the cost inefficiency scores and inefficiency model simultaneously. Our empirical results are summarized as follows that cost efficiency scores of the sample firms improved year by year. The relationship between the Patent right and cost efficiency is significantly positive. The relationship between a IC Design firm's scale and its cost efficiency is significantly negatively.