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iPad Air teardown shows lower build cost than third-gen iPad

updated 11:01 am EST, Tue November 5, 2013

Uses single LTE chipset for all US carriers

In spite of shifting to more advanced components, the iPad Air is actually cheaper to build than the third-generation iPad was, according to a teardown by IHS iSuppli. The cost is estimated to be between $274 and $361 per unit, depending on the exact configuration. The base cost is $42 less than it was for the third-gen iPad. One contributing factor is the A7 processor, which while costing $18 per unit, is still $5 less than an A5 processor was 18 months ago.

Parts in general have come down in price, since the iPad has not changed radically since the third-gen. One difference is the switch to a universal, $32 cellular chipset from Qualcomm. The technology lets a single chipset handle every necessary LTE band, in turn reducing the number of models Apple has to manufacture. "This is something Apple tried to do with the iPhone 5s and 5c, but it couldn't quite get there," says IHS analyst Andrew Rassweiler. "One single model of the iPad Air is able to work with all US wireless carriers."

Apple's gross profit margin on the Air is said to scale from 45 percent on 16GB Wi-Fi units to 61 percent on 128GB LTE models. Although the tablet is cheaper to produce as a whole, a countervailing force is the display, which costs a substantially higher $133. $90 of that is for LCD components, while the remaining $43 is for the touch assembly. Apple is now using a cycle-olefin polymer touch sensor, reducing the number of glass layers on the iPad from two to one. The number of LED lights has been dramatically reduced from 84 to 36, improving weight and power consumption, but optical film is needed to better distribute light.

Suppliers are believed to be mostly the same as for other Apple devices. Samsung and LG Display are thought to be providing display panels, paired with a Broadcom controller for the touchscreen. Aside from Qualcomm, Skyworks, Avago, and TriQuint are said to be producing wireless components. Dialog Semiconductor is handling a power management chip, while Cirrus Logic does audio. Bosch, STMicroelectronics, and AKM Semiconductor are noted to be responsible for the accelerometer, gyroscope, and compass, respectively.

Elpida, Samsung, and SK Hynix are thought to be supplying DRAM; the teardown unit had Elpida chips. Likewise, the unit had Toshiba-made flash storage, but Samsung and SK Hynix are also known Apple flash suppliers. Memory costs the company between just $9 and $60, even though the company charges an extra $100 for each doubling of capacity.

by MacNN Staff



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