New 16GB Wi-Fi Apple iPad cost $316.05 to make says iSuppli

New 16GB Wi-Fi Apple iPad cost $316.05 to make says iSuppli
According to iSuppli, Apple cost to manufacture the 16GB Wi-Fi model of the new Apple iPad is $316.05. The tablet retails for $499 in the U.S. giving the Cupertino based firm a better than 50% margin on each unit sold. The 64GB LTE variant of the new Apple iPad costs $408.70 according to iSuppli, and retails for $829 which would mean that Apple has even higher margins on the sale of each of those models. The cost basis for the third-generation tablet is higher than the cost to build Apple iPad 2, but Apple has decided to keep the pricing the same which means a cut from the margins Apple had with last year's model. For example, the new 16GB Wi-Fi version costs 28% more to build while 32GB LTE model costs 9% more to produce than the 32GB Apple iPad 2 with 3G. Some of that higher cost is from the use of the Retina display on the new model.

Apple really makes the big bucks on those tablets with more NAND memory. While the difference in cost between a 16GB flash memory chip and a 32GB one is $16.80, Apple raises the retail price by $100. And we now can put a price on Retina display. The display on the Apple iPad 2 cost $57 while it is now $87 on the new iPad meaning that the Retina display cost $30 more per tablet to include. The display is also the highest cost component in the device.

Samsung, Apple's arch enemy in the courtroom, is Apple's BFF in the clean room. According to iSuppli, 40% of the new Apple iPad's internal parts are from the Korean manufacturer including the LCD screen (with Sharp and LG in the bullpen), the A5X processor, and the NAND memory (along with Toshiba and Hynix). With iSuppli thinking that Samsung is also responsible for the battery in the unit, Sammy's total percentage of its exposure to the internal components of the iPad could run close to 50%.

source: iSuppli via MobileSyrup

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6. gogorock01

Posts: 1; Member since: Mar 18, 2012

5. hung2900

Posts: 966; Member since: Mar 02, 2012

"Samsung, Apple's arch enemy in the courtroom, is Apple's BFF in the clean room" Funny huh:))

2. darktranquillity

Posts: 285; Member since: Feb 28, 2012

I think this price is for making an individul unit. When it comes to mass production, the prices of raw materials and such comes down significantly leaving apple with the said amount of profit. Correct me if i'm wrong.

10. stealthd unregistered

Why would anyone price out a literal single unit when they're ONLY made in mass production?

1. markhsu

Posts: 15; Member since: Mar 17, 2012

My math is a little rusty but how do you get 50% margins with a cost of $316 and a selling price of $499?

3. cr4zyn1nj4

Posts: 4; Member since: Mar 07, 2012

Yeah, I think the word PA was looking for was markup, not margin. The markup is 58%, while the margin is 37%.

8. markhsu

Posts: 15; Member since: Mar 17, 2012

Markup is the wrong word as well. To get 58% markup based on their cost the selling price is $752.38.

4. raunak

Posts: 507; Member since: Oct 12, 2011

316 X 50/100 + 316 = 474. So you get 50% at 474. At 499$, you get even more.

7. Mario1017

Posts: 336; Member since: Sep 04, 2011

ya, 58%, but thats the markup, not the profit margin, profit margin is only 37%

9. markhsu

Posts: 15; Member since: Mar 17, 2012

I don't even know what you are trying to calculate in that formula. You are just adding half the cost of the product to the cost of the product which is fine but that does not equal profit margin. To get 50% margin you just multiply by 2 that is the easiest margin to markup. For all other percentages you take your cost, in this case $316.05 divide that by (1 - mu%) where mu% is the desired markup in decimal format. So what Mario noted below is that at $499 the margin is only 37% to check his math $316.05 / .63 = $501.67. His 37% was 36.6% rounded up so it checks out. I guess this is the result of schools not teaching business math and showing people how to make money. I hope you enjoyed your free business lesson today.

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