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Thread: Report Claims 16 GB iPhone 5 Costs an Estimated $207 to Make

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    MMi Staff Writer Akshay Masand's Avatar
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    Default Report Claims 16 GB iPhone 5 Costs an Estimated $207 to Make


    According to results from a virtual teardown from IHS iSuppli that were made public recently, Apple pays an estimated $207 to build the base model 16GB iPhone 5 (a cost slightly higher than last year’s iPhone 4S). The market research company noted in its report that while previously-expensive NAND flash memory prices have dropped, the iPhone 5’s display technology and 4G LTE wireless components brings the build cost up to $207, or $8 more than consumer pricing after wireless carrier subsidies. This is in comparison to last year’s iPhone 4S which was estimated to be $188.

    Added up, the iPhone 5 is estimated to have a BOM of $199, while the 32GB model rises to $209 and the 64GB version jumps to $230. With a manufacturing cost of $8 across the line, the final comes out to $208, $217, and $238 for the 16GB, 32GB, and 64GB models respectively. A report last Friday from UBM TechInsights pegged the 16GB iPhone 5’ BOM to be around $168, substantially lower than the IHS estimate. The most expensive part in the iPhone 5 is the new 4-inch display which comes in at $44. According to HIS Senior Principal Analyst, Teardown Services, Andrew Rassweiler:

    The iPhone 5 makes a big evolutionary step in technology that we have not seen elsewhere with the use of in-cell touch sensing, most other smartphone LCDs use a completely distinct capacitive touchscreen assembly that is physically separate and placed on top of the display. The iPhone 5 partially integrates the touch layers into the display glass, making the product thinner and reducing the number of parts required to build display that senses touch without the need for a separate capacitive touch layer.
    Apple is expected to be using a $34, LTE-capable wireless system from Qualcomm similar to the one found in the iPad 3. However, the new iPhone’s subsystem swaps out the first-generation MDM9600 baseband processor for the more advanced and power efficient second-generation MDM9615. In previous years, NAND flash memory was one of the more costly components, however current prices have nearly halved in less than one year. According to Rassweiler:

    NAND flash continues to come down in price as manufacturing processes for these memory chips become more advanced and because it is the world’s largest buyer of NAND flash, Apple gets preferential pricing. Apple’s massive leverage in this market is reflected in our price estimate.
    Last but not least the firm is estimating Apple’s new A6 processor is a bit more expensive at $17.50 than the A5 found in the iPhone 4S, which cost $15 in 2011. A more comprehensive analysis of the new handset’s internal parts is expected to be completed when the iPhone 5 hits store shelves on Friday.

    Source: IHS iSuppli via AppleInsider
    Last edited by Akshay Masand; 09-19-2012 at 06:11 AM.

    Twitter: @AkshayMasand

  2. #2
    I'm sure they took into account the tens of millions of orders for each part which I'll bet Apple pays far less for the parts then these people figure. Take that into account with two dollar an hour labor and they make out just fine.

  3. #3
    These reports are always so misleading. It's easy to put a price tag on the components & manufacturing costs, but you're forgetting about the millions spent on R&D, the salaries of the employees who worked on it (including the underpaid Foxconn workers) and the "other" expenses incurred in manufacturing (defective units, broken parts, assembly down time, etc.) All those costs have to be recouped one sale at a time.

  4. #4
    it kind of sucks knowing that to go from the 16g to the 64g, it costs them an extra 31 bucks, but they hike the price up 200 bucks. same manufacturing and everything, just a diff. flash. oh well. thats the price you pay i guess for getting top of the line

  5. #5
    How many times have we seen these short sighted cost analysis. Dont forget to add in the amortization of hundreds of millions of dollars in design and development costs. It would be great if you could just snap your fingers and all of a sudden you have this wonderful product you were selling and you only had to account for the actual cost of it's components...

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    iPhone? More like MyPhone rockyseay's Avatar
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    Quote Originally Posted by repoman16 View Post
    it kind of sucks knowing that to go from the 16g to the 64g, it costs them an extra 31 bucks, but they hike the price up 200 bucks. same manufacturing and everything, just a diff. flash. oh well. thats the price you pay i guess for getting top of the line
    Top of the line? Lmao!!!

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    Does anyone know the estimated cost for that Galaxy S3?

  8. #8
    Quote Originally Posted by TechnoUniversity View Post
    Top of the line? Lmao!!!
    yes. the 64g is the highest size of that make/model you can get.

  9. #9
    Quote Originally Posted by repoman16 View Post
    it kind of sucks knowing that to go from the 16g to the 64g, it costs them an extra 31 bucks, but they hike the price up 200 bucks. same manufacturing and everything, just a diff. flash. oh well. thats the price you pay i guess for getting top of the line
    sucks even more when in Australia we have to pay $150 more even though our $ is stronger than US,with the current exchange rate it should only be $619 not $799....bullcrap.....i'm still buying it though!!!

  10. #10
    Quote Originally Posted by brianiino View Post
    Does anyone know the estimated cost for that Galaxy S3?
    I tried to google this for you three pages all I found was a lot about some shortage.

  11. #11
    I hope Apple gets rid of the 16GB iPhone starting next year, and begin with 32GB @ $199. More value for our hard earn dollars. Extra $100 for a measly 16GB is a very bad deal.

    Quote Originally Posted by brianiino View Post
    Does anyone know the estimated cost for that Galaxy S3?
    Well it far exceed Apple's estimate cost that's for sure. The screen alone is at least $250 on eBay already, while Apple screen is far less in the double digit range.
    Last edited by xclusiveiphone; 09-19-2012 at 12:45 PM.

  12. #12
    Don't forget about logistics costs, and advertising, and lawsuits, etc...

    Quote Originally Posted by dsjarvis View Post
    sucks even more when in Australia we have to pay $150 more even though our $ is stronger than US,with the current exchange rate it should only be $619 not $799....bullcrap.....i'm still buying it though!!!
    That is because Apple gets charged some VERY hefty fees to transfer all those dollars into USD. It's not as simple as going to the bank and trading in a $20. International banking is expensive because customs agencies get involved.
    It's not where you've been, or where you're going..
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  13. #13
    Quote Originally Posted by CynicalDriver View Post
    Don't forget about logistics costs, and advertising, and lawsuits, etc...
    Seems like you want to know the true cost of making the phone which is impossible to know, unless your a high rank apple employee; it's called an estimate for a reason...

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