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iPhone 3GS costlier to make than 2008 model

updated 07:40 am EDT, Wed June 24, 2009

iPhone 3GS iSuppli Costs

Apple's newest iPhone actually costs slightly more to make than the older version in spite of the more modest update, iSuppli says. The iPhone 3GS' total bill of materials amounts to $178.96 for a 16GB model, or slightly more than the previous $174.33 of the 8GB iPhone 3G. Some of the cost difference is attributed to recent rises in the prices of NAND flash memory; although 16GB costs less to make than it did a year earlier, a small rebound due to economy-driven supply cutbacks means Apple has had to absorb some costs to double its storage.

This year, the memory is one of the more expensive components of the device; the 16GB chip package has a raw cost of $24 while the 32GB package costs $46.

Other components are trade-offs. Although the screen price has dropped a dollar to $16 even with the oil-resistant screen, the faster, Samsung-made 600MHz ARM Cortex A8 processor is a similar amount more expensive than the 412MHz ARM11 chip from the year before. The next most expensive part is a $13 cellular baseband chip from Infineon, which has been present in each iPhone since launch.

Notably, the 3GS makes an important change in the non-cellular wireless chipsets provided by Broadcom. While a small $1.60 controller from the 3G is gone and has likely had some of its folders duplicated, a more advanced $6 component is in place that supports Bluetooth and Wi-Fi together; it likely also incorporates the Nike+ transceiver functions. That same chipset was used in the LG Renoir (KC910) and, notably, includes an FM radio. However, Apple is unlikely to enable FM and it's possible Broadcom may have permanently disabled the FM in return for a lower price.

Additional parts in the iPhone 3GS include the new magnetometer (digital compass) from AKM Semiconductor, a Cirrus Logic audio processor, an accelerometer from STMicroelectronics, a power management unit from Dialog Semiconductor and a mystery Texas Instruments chip.

By contrast, the Palm Pre is believed to be less expensive to make despite having a similar $199 price tag as a 16GB iPhone 3GS, owing partly to the reduced 8GB of storage, smaller screen and absence of parts like the compass. However, Palm likely isn't able to push the price downwards as Sprint can't necessarily offer as heavy a subsidy on the up-front price as AT&T can on the iPhone, which is more likely to sell in large numbers and offset its costs through data plans.

by MacNN Staff



  1. gudin

    Joined: Dec 1969


    Is this news?

    Seriously, $4 more or less? Is there someone who thought they'd be precisely the same cost down to the penny?

  1. mprogers

    Joined: Dec 1969


    A minor typo

    Instead of "folders duplicated", I believe you meant to write "functions duplicated".

  1. luckyday

    Joined: Dec 1969



    This is the most poorly written article I have ever read in my life.

    I bet even slapppy and nat will agree.

  1. Gazoobee

    Joined: Dec 1969


    pointless analysis

    Given that a large part of the cost difference is quoted as being due to fluctuating NAND prices and also that previous articles, some published on this very site have stated that Apple has an assured supply of those chips at guaranteed and essentially frozen prices, this whole article makes little sense to me. Also, you failed to include the standard disclaimer that this is just the price of the parts and not the actual cost to make the device. The fact that it's a very similar product to the old 3G, and produced on the same assembly line but in larger numbers would probably allow for efficiencies of scale. We could expect that the four dollars (or a lot more than four dollars) would be recouped in a more efficient production run. Finally, the fact that the phone is internally assembled quite differently from the 3G would seem to be a giant flashing indicator that this is exactly what has happened.

  1. Tanker10a

    Joined: Dec 1969


    Who Cares

    They were close to the million mark by weekend lunch alone.

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