iPad Air costs Apple $274 to make, has fatter profit margin than the iPad 4

Research firm IHS iSupply has torn down the new Apple iPad Air, providing valuable insight into the components cost breakdown. Its full report is not due until a few weeks from now, but for the time being it lets us know that the iPad Air starts off at $274 for Apple. This makes it actually cheaper to produce than the previous generation, despite the ultra thin and light machined aluminum design.

The most expensive part is, naturally, the 9.7" 2048 x 1536 pixels display package, which is now 20% thinner than before, with brighter and more efficient LED lighting, reducing the amount of sources from 84 to 36, thus contributing to one of the most compact tablet designs out there. This screen is said to cost $90 for the display, and $43 for the integrated touchscreen part, making for a grand total of $133 - the most expensive part in the tablet.

The research firm suggests that Samsung and LG are the producers, but the twofold shrinkage in the LED lighting needed and the thinner package are speculated to come from utilizing Sharp's promising IGZO display technology. 

The A7 chip, manufactured by Samsung, costs Apple $18 a pop, while the Qualcomm cellular connectivity radio with its record 14 LTE bands support, runs it $32. The other expensive part besides the casing is the flash memory module, which ranges from $9 for the 16 GB unit to $60 for the 128 GB model. Not a bad deal for Apple, considering that the most expensive model with cellular connectivity sells for $929, while it costs Apple $361 to make plus some more for R&D, marketing and distribution.

Related phones

iPad Air
  • Display 9.7" 2048 x 1536 pixels
  • Camera 5 MP / 1.2 MP front
  • Processor Apple A7, Dual-core, 1400 MHz
  • Storage 128 GB
  • Battery 8820 mAh



1. Long1

Posts: 399; Member since: May 18, 2013

So again Samsung device with Apple logo on it. Right? Only the cheap tin-can comes from Apple.

3. Ninetysix

Posts: 2965; Member since: Oct 08, 2012

You sound upset brosephine. Must suck getting bullied by Apple while growing up.

9. androiphone20

Posts: 1654; Member since: Jul 10, 2013

Bwaaaaaahhhh-da bang-da bang-diggy-diggy-diggy Said the boogie-said up jump the boogie

10. androiphone20

Posts: 1654; Member since: Jul 10, 2013

Bwaaaaaahhhh-da bang-da bang-diggy-diggy-diggy Said the boogie-said up jump the boogie

11. androiphone20

Posts: 1654; Member since: Jul 10, 2013

Bwaaaaaahhhh-da bang-da bang-diggy-diggy-diggy Said the boogie-said up jump the boogie, +1

2. ihavenoname

Posts: 1693; Member since: Aug 18, 2013

Premium product, premium pricing.

4. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

or sell it for $349 put it in every home in the world just about. Destroy the competition and still make 75 bucks profit. ya, stupid i know. $500-900 for iPads after 5 of them without a single price job is not premium, it's stupid. It's dThey'd own 90% market share and still make profit, what a schmuck i am for thinking this way.

7. asulect

Posts: 131; Member since: Aug 27, 2012

The $349 is only the material cost. There's still a whole sea of other costs that are not included into it. ie, Labor cost to assemble the product, packaging cost, shipping cost, sales cost, Marketing cost, research and development cost, warranty cost, unsold inventory cost, etc... If the mathematics is that simple, then companies like Nokia, HTC and blackberry can never lose money. The raw material cost to make an HTC or Nokia or Blackberry phone is definitely less than what they charge per phone, why losing massive amount of money?

8. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Actually you would be a smhmuch for thinking that way. They make like 200 off that thing and then some for higher models. If they were to make only 75, theyd have to sell at least $500 worth of apps per tablet to make the remainder up. Then they would also dilute their brand and it would be more costly to produce. Finally it would not guarantee that the rest of the plastic makers would not undercut and reduce it all together.

27. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

Apple has enough hands in pots to do great without rape margins on hardware. They get a piece of everything in and out of iOS. I get the apple high margins when they were a premium product. Macs were a step up fo sure. iOS devices are just your average consumer products. No reason to pretend they are worth more and their margins are deserved. They aren't but ya know what? iPad would dominate the market beyond your iClone wildest dreams if they lowered closer to the competition. Then once they own the market, I am sure they would be doomed! omg, what would they ever do to make money. How bout 30% of everything goin in and out of iOS. You fool appledoesnt, you make no sense! I want apple to charge me more for less, it just makes me feel better!!! :/

14. stealthd unregistered

Yeah, you are a schmuck. They'd be digging a hole they can't clime back out of. Prices would go down and they would have to stay down, because who's going to spend more once they lower the price? Lower prices, lower margins, lower revenue, lower profits, lower stock price. But at least they'd have market share. Really a win-win right?

15. Finalflash

Posts: 4063; Member since: Jul 23, 2013

True dat.

26. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

other companies sell for slim margins, kindle was given away for a loss. Apple has their hands in enough pots to stop raping their iFollowers. Yet, they rape a little more each yesar with S hit after S hot. Xbox 360 was $175 in the whole on launch day. $75 profit is higher than most companies ever make and you guys applaud the $225-$500 Apple margins. Pathetic. Each year the iPad is the same thing albeit it a little thinner, a little faster and a little cheaper, yet the price has never gone down when it is over priced in the first place. What electronics do that, none. Well none but greedy, pathetic, iClone lovin, do no wrong even when getting price raped, apple

29. ardent1

Posts: 2000; Member since: Apr 16, 2011

None the stuff you said makes any sense. These are willing buyers of Apple products. We don't want to buy junk. With Apple products, we get a fair price (as measured by depreciation expense), products that hold their value, customer support at Apple stores (if we need it), legendary build quality (compare to its competitors), highly polished and really aesthetically attractive design and material. Apple pays attention to the details. Their devices work.

28. ardent1

Posts: 2000; Member since: Apr 16, 2011

Apple does not want market share. They want to build great products. If you want a $79 7" tablet, you can find it at Walmart. For $50 more, you can get the Hi-Sense tablet with a better display and a better processor. Or, take my recommendation and buy the Nook 7" tablet that are going for under $100 in some places. That is a good tablet for the price. The market is flooded with junk tablets. And many of the manufacturers are leaving because they can't compete in the low price tablet environment. Adios BN, it was nice knowing you.

32. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

$349 is not $79. Bullcrap on the premium bs. They are consumer tablets and in a area where they would destroy all competition by simply lowering their profit margins, you guys are raw raw profit margins, go apple in your way of thinking. Fine, $399, it's been 5 iPads, prices go down to make it, it's time the profit margin went down a bit to. oh my, iFollowers deserve the ripoff apple is

5. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Oh god no, please don't say it has IGZO. That was supposed to be the dream screen battery saving tech...its supposed to be 60% more battery life. Don't tell me it was all a lie.

6. _Bone_

Posts: 2155; Member since: Oct 29, 2012

The Air has twice as fast HW, 20% less battery and more battery life. There's a good chance the screen reached 30-40% more efficiency, which it outstanding leap in the tech world.

12. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Not really, the twice as fast thing is at a very power conservative process so that barely takes more than the last generation as the iPhone 5s showed. The battery life is the same as last year as shown by every review. Display is more frugal than last time, but not by 40-60% as shown by not that much batter being saved. Nothing else changed and the OS was improved to save more battery, so I don't see the IGZO advantage here.

16. Taters

Posts: 6474; Member since: Jan 28, 2013

Igzo allows you to make it thinner basically. The battery life is just a marketing gimmick. I don't know if I can find it but there was one article that said Samsung licenced some igzo tech for the Nexus 10 so this isn't the first.

17. Long1

Posts: 399; Member since: May 18, 2013

Samsung even own a share of IGZO.

19. Finalflash

Posts: 4063; Member since: Jul 23, 2013

They own a chunk of Sharp now so they do, but they don't have any full IGZO in anything right now. The only thing that does is some random phone in Japan by Sharp themselves, but that wasn't anything to compare off of though. Regardless, I don't think IGZO is on this iPad because they said they wouldn't have full scale production for IGZO in place until Q1 next year. At the volume the iPads sell, I doubt they'll have enough screens a quarter ahead of time.

13. marchels14 unregistered

Big $ for Apple 361$ to make but 929$ to sell, I understand there is marketing profit and other expenses,but I think its bit too much to ask for from customers. I don't care about premium design, but this is just a way to empty our pockets.

18. donfem

Posts: 708; Member since: Mar 30, 2011

+1 to this.

30. ardent1

Posts: 2000; Member since: Apr 16, 2011

Then start your own company making tablets since you are so damn smart.

20. gallitoking

Posts: 4721; Member since: May 17, 2011

it's call brand recongnition... that's why Coach can sell you a womans purse for 500+ dollars and Christian Dior a belt for 349.99... yes a belt for 349.99..

21. tedkord

Posts: 17417; Member since: Jun 17, 2009

Ugh. My wife has an affinity for Coach purses. It drives me nuts that she will pay $400 for a goddamned bag. But that is an analogy I've made before. She doesn't buy them because they do more than another bag, or because the are better than other bags. She buys them because they have a known name (at least among purse buyers), and other women will see and recognize that brand.

23. gallitoking

Posts: 4721; Member since: May 17, 2011

yes my wife is the same and shoes..wow.. they charge like they are made by angels... but anything for the wifey...

24. darkkjedii

Posts: 31328; Member since: Feb 05, 2011

Ted don't mention your wife dude, Xperiadroid will go nuts, and flame in you lol. He's let me know, I can no longer say wife, mini 2, line up, or bring it on apple. If I do, I'll incur his wrath. BTW with my wife it Michael Khors (spell check please). Oops Xperia my bad, I meany my "life".

22. darkkjedii

Posts: 31328; Member since: Feb 05, 2011

About time someone stepped in with some reality. Everyone's dogging apple for doing what all these big popular well known companies do. Build low sell high, it's called capitalism. +1 dude. Get money apple, I've got some for you to take when the mini2 drops.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.