Rachel Metz

A View from Rachel Metz

Apple's New iPhones Cost $207-$238 to Make

A dissection of the smartphone by iSuppli indicates cheaper memory, pricier wireless chips.

  • September 25, 2012

Apple’s latest iPhone costs between $207 and $238 to manufacture, depending on how much memory is included, according to a physical teardown report released Tuesday by market researcher IHS iSuppli that takes into consideration both the cost of materials and manufacturing of the smartphones. With a wireless contract, they cost between $199 and $399, (or between $649 and $849 without).

The costs varies mainly due to cheaper NAND flash memory–which was supplied by SanDisk, rather than Samsung as on the iPhone 4S– and the use of a more expensive radio chip needed to use 4G LTE wireless networks.

Each 16-gigabyte iPhone 5 cost $207 in parts and labor to build, iSuppli says, up $11 from the $196 that the market researcher estimated for the iPhone 4, due mainly to that 4G LTE chipset and a more expensive touch-screen display. The price of NAND flash memory on the phone dropped to $10.40 from $19.20.

On the high end, iSuppli believes the 64-gigabyte iPhone 5 cost $238 to build, down from $253 to make the previous version. The decline stems almost entirely from less expensive flash memory–it cost $41.60 on the iPhone 5 compared with $76.80 on the iPhone 4S.

Despite their recent legal skirmish and dropping use of its memory chips, it appears that Apple still relies on its competing smartphone maker Samsung for a key part of the iPhone: The A6 processor, which iSuppli believes cost $17.50 to make. iSuppli’s estimates, which include an $8 manufacturing cost but exclude things like software, licensing, and royalties, confirm what the market researcher had predicted in a virtual teardown last week.

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