iPad 2 Costs About $323 to Manufacture
The iPad2 has received another tear down, this time by market research firm IHS iSuppli. This teardown is an estimate of the total cost of materials that Apple uses to manufacture the latest iPad 2. These figures help investors and analysts predict Apple’s future profitability over the next few quarters.
IHS iSuppli estimates the total cost of materials for the Verizon 3G version of the iPad 2 with 32 GB to be $323.35. The same iPad 2 model on AT&T's network has a slightly higher cost estimate of $326.60. The difference in price is minimal at only $3.25 and most likely has to do with the fact that both versions use slightly different wireless components. For example, the AT&T version includes an extra GPS chip along with the Bluetooth and Wi-Fi chips that add an extra $1.50 to the price of each unit.
The iPad 2 that iSuppli disassembled included an LCD panel made by LG. This LCD display is by far the highest price component coming in at $127. Apple does use LCD panels from other manufacturers, but the price difference is most likely very minimal. Apple's latest A5 chip is still being manufactured by Samsung and costs around $14 each. The memory on the 32 GB iPad 2 is said to cost $65.70 for both flash and DRAM memory chips combined.
The total cost estimates for the iPad 2 is an important figure for investors because it helps them estimate Apple’s future profitability. These estimates, however, do not take into account other costs that Apple incurs during product development. The cost of an iPad 2 also includes such things as software development, packaging, shipping, distribution, and manufacturing. Additional costs such as these are not taken into account with the latest iPad 2 tear down estimates.