toggle

AAPL Stock: 528.44 ( -3.26 )

Printed from http://www.macnn.com

Teardowns put iPhone 5s build cost at $199, 5c at $173

updated 12:33 pm EDT, Tue September 24, 2013

Apple increases profits by sharing parts

New teardowns of the iPhone 5s and 5c conducted by IHS iSuppli suggest that Apple lowered its iPhone production costs with the new hardware. Apple is estimated to be spending at least $191 in components to build a 16GB 5s, and $210 on a 64GB model. Assembly costs roughly $8 per phone, putting the expense of building a 5s between $199 and $218. By contrast, the iPhone 5 is estimated to have cost Apple at least $205 to build.

Although Apple sells a 16GB 5s for $199 on contract, that price is heavily subsidized by carriers, who recoup the costs in monthly fees. The same model sells for $649 unlocked, earning Apple a substantial profit margin before factoring in aspects like marketing and research and development.

Display parts are estimated to be the most expensive part of an iPhone, amounting to $41 per unit. IHS speculates that Sharp, Japan Display, and LG Display are among the core suppliers; significantly, Apple has an investment in Sharp.

The total cost of producing an iPhone 5c is said to range between $173 and $183, depending on if it's 16 or 32GB. That price includes $7 for assembly. IHS analyst Andrew Rassweiler claims that aside from the 5s having an A7 processor, Touch ID sensor, and less power-hungry RAM, the 5s and 5c are "basically the same" inside. The similarity extends to radio frequency chips, which Apple appears to have concentrated efforts on. "Apple seems to be spending a lot of time and money combining RF chips," notes Rassweiler. "Where other phone companies would be using whatever chips its various vendors sell off-the-shelf, Apple seems to be pushing its RF suppliers to do things they don't do for anyone else."

He points out that whereas the iPhone 5 supported just five LTE bands, both the 5s and 5c can handle as many as 13. The RF unit used in the new phones is thought to cost about $32, and like other similarities, save Apple money because it doesn't have to buy separate parts.

The 5s' A7 processor is said to be worth $19, while the 5c's year-old A6 is $13. The special memory in the 5s is LPDDR3 format, meant "to support the higher-end processor," according to Rassweiler. The 5c uses older LPDDR2 chips. Suppliers are noted to include SK Hynix, Elpida, and Samsung, the last of whom also builds the A6 and A7.




by MacNN Staff

POST TOOLS:

TAGS :

toggle

Comments

  1. Inkling

    Junior Member

    Joined: 07-25-06

    With only a $26 difference in the build costs, it's difficult to see why Apple even bothered with the 5c. The iPhone 5s is twice the machine for only a trifle more.

  1. iBricking.com

    Fresh-Faced Recruit

    Joined: 12-18-07

    If it's so cheap why there isn't any phone similar even for the double of price?

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by iBricking.comView Post

    If it's so cheap why there isn't any phone similar even for the double of price?



    Manufacturing is only a tiny part of rolling out a new product.

    And there are comparable phones on the market, though only the HTC One comes close in build quality.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by InklingView Post

    With only a $26 difference in the build costs, it's difficult to see why Apple even bothered with the 5c. The iPhone 5s is twice the machine for only a trifle more.



    That's over ten percent difference.

    And if they hadn't bothered with the 5c, they would've kept the 5 in the lineup for that price point, which would have meant higher cost and lower margins.

    They could probably offer the 5s for a lower price, but the opening weekend and sales of 3:1 vs. the 5c would indicate that they don't need to, so why should they?

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

MacNN Sponsor

Recent Reviews

STM Trust technology bag

The search for a good messenger bag that doubles as a laptop bag is something many travelers find themselves facing at least once. Bet ...

PenClic Bluetooth mouse

Windows 8 aside, computer users have been trained that a mouse is the proper way to navigate through the desktop for many years now. T ...

Booqpad for iPad Air

Before we get rolling, I'll confess: I've never understood the purpose of cases like the Booqpad. If you've got a tablet, surely p ...

toggle

Most Commented