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  • At $207, it costs Apple just $20 more to build a 16GB iPhone 5 compared to the iPhone 4S

At $207, it costs Apple just $20 more to build a 16GB iPhone 5 compared to the iPhone 4S

Posted: , by Daniel P.

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At $207, it costs Apple just $20 more to build a 16GB iPhone 5 compared to the iPhone 4S
IHS iSuppy have done a virtual teardown of the Apple iPhone 5, and they are the establishment that does Bill of Materials (BOM) estimates with confidence. There was one other preliminary BOM estimate before, at $168, which we notes sounds suspiciously low to us, considering this is the third year since a thorough redesign, bringing with it a new chassis.

Indeed, IHS iSupply estimates that the components in the iPhone 5 cost Apple $207 to build the handset, higher than the $188 of the iPhone 4S last year, which was using the body of the iPhone 4. The difference comes from the sophisticated multiband LTE radio from Qualcomm that costs $34 now, compared to $24 for the iPhone 4S radio, and, of course, the screen, which uses the novel in-cell touch packaging, costing $44 to Apple, due to the complicated production tech and low yields. Samsung has been using similar packaging, called on-cell, for its Super AMOLED displays since the first Galaxy S, and in-cell is the next step in that evolution.

At $207, it costs Apple just $20 more to build a 16GB iPhone 5 compared to the iPhone 4S
Hence, Apple won't make as much money from the iPhone 5 as it did from the iPhone 4S last year, but with time display yields will improve, the component prices will fall, and Apple will still be selling it north of $600 to carriers and consumers alike. Plus, it is not that a $20 difference to build the iPhone 4S when it launched last year, compared to the iPhone 5 now, will knock the bottomline off-kilter, considering how much more iPhone 5 units will sell due to the redesign and the LTE connectivity. As for the LTE radio inside, IHS confirms out analysis on the carriers that will be compatible with the iPhone 5:

We believe that Apple is implementing LTE in a particularly novel way. Apple ideally would like to sell one iPhone in all markets. However, there are so many different LTE frequencies that must be supported around the world that this has become a difficult thing to do. For most smartphone manufacturers, the solution is to build different variations of their smartphones for each carrier, so that they won’t spend extra money on superfluous components. However, this is not the Apple way.

Instead, the Apple way is to pack all of the features needed to support as many carriers as possible with a single product. Still, that will be tough to do in this situation. For now, IHS believes there are at least two different versions of the iPhone 5—each with multiband filters that will allow Apple to support as many global markets as possible with as few versions of the product as feasible. In some ways this is an expensive way to do business, but by maintaining the fewest numbers of variations possible, Apple is playing to its strength in product design

So, to a $207 BOM, which includes manufacturing, we have to add Apple's operating expenses like Selling, General&Administrative and Research&Development, which historically hover a bit below 10% of the revenue. 

Assuming $649 ASP for the iPhone 5, we get at around $270 total cost per iPhone, which still leaves Apple with about 140% profit per unit, and we are talking about the least expensive 16GB version here - on the 32GB and especially the 64GB units Apple makes much more. Well, it is not exactly cocaine profit margins, but still remains the most profitable piece of electronics in history.

source: IHS

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posted on 19 Sep 2012, 02:38 11

1. Kronic (banned) (Posts: 321; Member since: 11 Sep 2012)

High profits!!! Apple is very good at what they do!!!

posted on 19 Sep 2012, 03:29 14

6. doejon (Posts: 406; Member since: 31 Jul 2012)

no.., apple is good in fooling isheeps ahm.. sorry i mean people ;-)

posted on 19 Sep 2012, 05:31 7

8. doejon (Posts: 406; Member since: 31 Jul 2012)

this will be the first fragmentation of apple :-)

remember what tim said:
“One thing is that we’re not fragmented. Look at the percentage of users who upgraded to iOS 5. We have one App Store. We have one phone with one screen size, one resolution. So it’s pretty simple if you’re a developer.”

posted on 19 Sep 2012, 08:49 1

13. jimjam (unregistered)

Good at charging high mark ups.

posted on 19 Sep 2012, 02:47 6

2. phil2n (Posts: 487; Member since: 30 Apr 2012)

yup.. they are very good in profits.. nevermind about their product.

posted on 19 Sep 2012, 02:52 4

3. wendygarett (unregistered)

Can you please take my money Apple?

posted on 19 Sep 2012, 03:04 2

4. jshan (Posts: 200; Member since: 25 Dec 2011)

If you want buy an apple iPhone .. Then of caurse they have to take your money .. If you won't buy don't warry they would not take up your money !!!! ( don't warry on that ) the bottom line is they aren't taking money from anybody .. They just selling products and if u wanna buy they do the business that's all.. Simple like nothing !! ( and we call it as a deal )

posted on 19 Sep 2012, 03:13

5. Charlie_Appletree (Posts: 1; Member since: 19 Sep 2012)

are you a retard?

posted on 19 Sep 2012, 05:50

9. jshan (Posts: 200; Member since: 25 Dec 2011)

Sorry ?? I won't BOTHER u man !! :)

posted on 19 Sep 2012, 08:39

12. -box- (Posts: 3991; Member since: 04 Jan 2012)

@charlie: Not everyone here natively speaks English, and not everyone has a college degree in English either. Also, asking if someone is "a retart" is highly insensitive, and those that would be answering the question in the positive are likely unable to do so or would not be aware of that terminology for their condition/existence.

posted on 19 Sep 2012, 03:31 13

7. jibraihimi (Posts: 770; Member since: 29 Nov 2011)

Woow the price difference between makin cost of 16GB iPhone 5 and 64 GB iPhone 5 is only 31$, but the difference in their selling price is 200$. Apple really knows how to rob it's customers............

posted on 19 Sep 2012, 05:55

10. jshan (Posts: 200; Member since: 25 Dec 2011)

U can't call it as "ROB" cz they aren't stealing anything, they are just pricing their products in the way they want to... And people's who needs that demand and quality ,they gonna buy it on their own favors... No one stealing by any one //// BUT ANDROID ... ????

posted on 19 Sep 2012, 08:35 3

11. pikapowerize (banned) (Posts: 1869; Member since: 03 May 2012)

wow... this is really expensive!! oh well it is apple for crying out loud!

posted on 19 Sep 2012, 12:04

14. DonkeySauce (Posts: 194; Member since: 03 Dec 2011)

And people complain about having to pay $199.99 for them. I always explain to customers that we loose money on every phone I sell them, but they never believe me. They always say something like "That phone couldn't cost that much. It can't cost more than 50 bucks to make" etc etc etc.......

posted on 19 Sep 2012, 14:32 1

15. Schmao (Posts: 365; Member since: 05 Jul 2009)

Of course they don't have to pay much more. The iPhone is the same as it was last year, and the year before. No suprises.

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