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Teardown finds Samsung Galaxy S4 more costly to build than Apple's iPhone 5

post #1 of 41
Thread Starter 
An analysis of parts found inside Samsung's new Galaxy S4 has concluded the flagship smartphone is more costly to build than Apple's iPhone 5, with a price tag of $237 for the 16-gigabyte model.

iSuppli


The analysis conducted by IHS iSuppli found a great deal of difference between the U.S. and Korean versions of the Galaxy S4. Their estimates found that the AT&T version is cheaper, at $237, than the $252 model built for Korea, when the cost of parts and manufacturing are combined.

The biggest difference in cost comes from the processor: The AT&T model features a Qualcomm Snapdragon 600 quad-core CPU that is estimated at $20, while the Korean model has a $28 Samsung Exynos 5 Octa.

The costs compare to an estimated total bill of $207 for parts and manufacturing of Apple's 16-gigabyte iPhone 5. The two competing handsets are priced comparably with carrier contract subsidies, suggesting that Apple makes greater profit margins on the iPhone 5 than Samsung does with the Galaxy S4.

Of course, these estimated values do not include the money invested in research and development of both hardware and software. The teardowns represent only the component prices and costs to assemble the devices.

Galaxy S4


The most expensive part of the Galaxy S4 is the 5-inch touchscreen display, which is estimated to have a $75 price tag. The Super AMOLED screen features a 441-pixel-per-inch density and is protected by Corning's Gorilla Glass 3.

Other part estimates include the 13-megapixel rear and 2-megapixel front cameras ($18), 16 gigabytes of storage ($28), power management components ($9), and various sensors ($18).

The total bill of materials cost for the U.S. AT&T version is $229, while the Korean version costs $244. Both have an estimated manufacturing cost of $8.50, which brings them to their respective final costs.
post #2 of 41

Interesting. I wonder how accurate the pricing for parts is, especially considering how Apple has such a terrific supply chain, where they can pretty much dictate what they're willing to pay...

post #3 of 41
What a hilarious comparison. Build materials and manufacturing complexity aren't even taken into account. All that is compared are the internals of a hardware product that was released 6 months ago to one released TODAY, and concluding that the newer components cost more. Wow, my mind is blown.
post #4 of 41
1) This is iSuppli.

2) Even if we believe iSuppli has a decent idea of Apple and Samsung's BoMs there would be enough margin for error to show that they'll all pretty much the same.

3) The only think I think we can say for certain by looking at this figures is that the Korean S4 costs a little more than the US AT&T S4.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #5 of 41
"Of course, these estimated values do not include the money invested in research and development of both hardware and software. The teardowns represent only the component prices and costs to assemble the devices."

Because we all know how little Samsung spends on R&D. They've already saved billions copying the original iPhone design...

Why does Apple bashing and trolling make people feel so good?

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post #6 of 41
Quote:
Originally Posted by Dave MacLachlan View Post

Interesting. I wonder how accurate the pricing for parts is, especially considering how Apple has such a terrific supply chain, where they can pretty much dictate what they're willing to pay...

Let me put this way, iSupply pricing is completely wrong, it is a guess at best and I am not even sure how they come up with their pricing. In some cases I know the market pricing of parts and their pricing has never been right on they are either high or low and I am not talking about a small amount, ti seen their spreads very as much as 20%.

 

They my come close in the total price is some guesses are low and other are high so it averages out. Also with Samsung, they are assume they pay market pricing for part they buy from other Samsung business, that may not always be true.

post #7 of 41
I wonder if the octa core version is as laggy as the quad core.

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post #8 of 41
Quote:
Originally Posted by LarryA View Post

I wonder if the octa core version is as laggy as the quad core.

Since only 4 cores are ever working at once I'd think that would depend on which on which of the 4 of 8 cores are engaged.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #9 of 41

I believe the cost difference is mostly attributable to the authentic plastic shell of the S4.

Plus it costs good hard cash to manufacture an OLED display with pentiles instead of pixels and poor color accuracy.

post #10 of 41
Quote:
Originally Posted by LarryA View Post

I wonder if the octa core version is as laggy as the quad core.

I think it is safe to say that they aren't using an octo-core chipset to contain costs. I think it is also safe to say that if they could cram a dodeca-core chipset in a smartphone they would; after all their competitors already cram dodeca-core chipsets in tablets (which still doesn't resolve the performance issues).
post #11 of 41
Quote:
Originally Posted by AppleInsider View Post

An analysis of parts found inside Samsung's new Galaxy S4 has concluded the flagship smartphone is more costly to build than Apple's iPhone 5, with a price tag of $237 for the 16-gigabyte model.

 

16 gigabyte???

 

Don't you mean the 8?

 

 

 

/s

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post #12 of 41
"...values do not include the money invested in research and development of both hardware and software."

Samsung should use an off-the-shelf, ready-to-use OS to save money, instead of having to build an OS from scratch.
post #13 of 41
Quote:
Originally Posted by Cpsro View Post

I believe the cost difference is mostly attributable to the authentic plastic shell of the S4.

Plus it costs good hard cash to manufacture an OLED display with pentiles instead of pixels and poor color accuracy.

Not to mention all the expense of copying ideas from others, as opposed to the relatively inexpensive process of inventing it all yourself!

post #14 of 41
If they don't have Tim Cook, and Apple's small-model-range economies of scale, they certainly ought to be more expensive! Even as cheap as they feel.
post #15 of 41
Quote:
Originally Posted by Cpsro View Post

I believe the cost difference is mostly attributable to the authentic plastic shell of the S4.

Plus it costs good hard cash to manufacture an OLED display with pentiles instead of pixels and poor color accuracy.

 

Hate on brother, hate on.  We'll ignore that reviewers seem to love the screen despite the pentile and.. uhm.. blacker than black blacks.

post #16 of 41
Quote:
Originally Posted by macinthe408 View Post

"...values do not include the money invested in research and development of both hardware and software."

Samsung should use an off-the-shelf, ready-to-use OS to save money, instead of having to build an OS from scratch.
They do, but add a bunch of unwanted stuff so it is 8 gb vs 14.
post #17 of 41
Quote:
Originally Posted by AppleInsider View Post

Of course, these estimated values do not include the money invested in research and development of both hardware and software. The teardowns represent only the component prices and costs to assemble the devices..

Apple: $4 billion in R&D costs
Samsung: $3.75 in copies at Kinkos.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #18 of 41

yeah, what this neglected to mention was that iSuppli found that most of those parts are coming from Samsung itself - The screen, ram, camera module are all made by Samsung - they are basically their own supply chain, so Most of that cost goes right back to Samsung.

post #19 of 41
Quote:
Originally Posted by agramonte View Post

yeah, what this neglected to mention was that iSuppli found that most of those parts are coming from Samsung itself - The screen, ram, camera module are all made by Samsung - they are basically their own supply chain, so Most of that cost goes right back to Samsung.

I thought the camera came from Sony, straight out of the Experia line.
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post #20 of 41
Quote:
Originally Posted by agramonte View Post

yeah, what this neglected to mention was that iSuppli found that most of those parts are coming from Samsung itself - The screen, ram, camera module are all made by Samsung - they are basically their own supply chain, so Most of that cost goes right back to Samsung.

The glass and the display too?

post #21 of 41
Quote:
Originally Posted by anantksundaram View Post

The glass and the display too?

not the glass... the display yes.

post #22 of 41
Quote:
Originally Posted by hill60 View Post


I thought the camera came from Sony, straight out of the Experia line.

 

I know Apple uses SONY - did not know Samsung did . It is unlabeled, but according to AllD it comes from Samsung. I mean Samsung does have a digital camera line - Hard to see SONY not marking their stuff, but if it is SONY good for them, they need the cash :)

 

http://allthingsd.com/20130508/samsung-galaxy-s4-costs-237-to-build-teardown-analysis-shows/

post #23 of 41
 

 

I wish they had put the iPhone 5 up also just for relative comparison (since that's all this kind of vague info is good for).   So I grabbed both.   Looks like the display and sensors are the big extra expense.

 

post #24 of 41

deleted


Edited by MacRulez - 7/24/13 at 10:48am
post #25 of 41
Quote:
Originally Posted by MacRulez View Post

Both the iPhone 5 and the Galaxy S4 use Samsung components.

Both the iPhone 5 and the Galaxy S4 use Apple designs.

 

Cheers

post #26 of 41
Apple and Samsung both use custom designed parts that are not available to companies like iSuppli although a Qualcomm equipped LTE S4, could be reproduced.

As far as I know Apple's A and Samsung's Exynos series SOC's are not available for sale.
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post #27 of 41
Quote:
Originally Posted by Neo42 View Post

 

Hate on brother, hate on.  We'll ignore that reviewers seem to love the screen despite the pentile and.. uhm.. blacker than black blacks.

You neglected to mention the redder-than-red reds, greener-than-green greens, and bluer-than-blue blues, too. Of course the pentiles on the S4 are too small for the eye to normally detect, but they're still there, doing their job of making the images look so special. 

Yes, Samsung really knows how to blow out color.

It's cheery eye candy for kindergarten sensibilities.

There's a reason why the backgrounds and screen savers on Samsung smartphones are often CGI scenes instead of Nature scenes... because Nature scenes and images of people don't look natural. The Samsung standard image of dandelion seeds against a blue sky background looks so unreal on their phones that the color has to be toned way down for use in advertisements. That's Samsung innovation!

post #28 of 41
Quote:
Originally Posted by Cpsro View Post

I believe the cost difference is mostly attributable to the authentic plastic shell of the S4.

Plus it costs good hard cash to manufacture an OLED display with pentiles instead of pixels and poor color accuracy.


Is your other one-liner to do with actual sales vs supply chain I wonder?

 

 

Quote:
Originally Posted by Cpsro View Post

You neglected to mention the redder-than-red reds, greener-than-green greens, and bluer-than-blue blues, too. Of course the pentiles on the S4 are too small for the eye to normally detect, but they're still there, doing their job of making the images look so special. 

Yes, Samsung really knows how to blow out color.

It's cheery eye candy for kindergarten sensibilities.

There's a reason why the backgrounds and screen savers on Samsung smartphones are often CGI scenes instead of Nature scenes... because Nature scenes and images of people don't look natural. The Samsung standard image of dandelion seeds against a blue sky background looks so unreal on their phones that the color has to be toned way down for use in advertisements. That's Samsung innovation!

 

You haven't actually read any of the technical reviews of  the display performance of the S4, have you?  Want some links?

post #29 of 41
Quote:
Originally Posted by jragosta View Post


Apple: $4 billion in R&D costs
Samsung: $3.75 in copies at Kinkos.

 

Samsung spent $10.3 B on R&D last year while Apple spent $3.38 B

post #30 of 41
Quote:
Originally Posted by cnocbui View Post

 

Samsung spent $10.3 B on R&D last year while Apple spent $3.38 B

 

How much of that was on how to build ships, wash clothes, cook food, work out insurance and financial risks or any of the other industries they are involved in?

 

R & D for shipbuilding probably isn't cheap.

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post #31 of 41
Quote:
Originally Posted by hill60 View Post

How much of that was on how to build ships, wash clothes, cook food, work out insurance and financial risks or any of the other industries they are involved in?

 

R & D for shipbuilding probably isn't cheap.

 

That R&D was just for Samsung Electronics.  They do not build ships.

 

About a minute's worth of searching would've let you find out what their R&D centers do:

 

post #32 of 41
hard to believe with that quality
post #33 of 41
Originally Posted by MacRulez View Post
Both the iPhone 5 and the Galaxy S4 use Samsung components.

 

We'll let you know when we give a crap.


Edited by Tallest Skil - 5/10/13 at 1:14pm

Originally Posted by asdasd

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post #34 of 41
Quote:
Originally Posted by cnocbui View Post

 

You haven't actually read any of the technical reviews of  the display performance of the S4, have you?  Want some links?

Apparently you don't know how Samsung markets the S4 and how compromising Android users are in order to lay claim to superiority (legends in their own minds),

and you're unwilling to acknowledge Samsung has reaped huge profits by infringing Apple IP, with said profits being used to further bolster its market position.

post #35 of 41

deleted


Edited by MacRulez - 7/24/13 at 10:48am
post #36 of 41
Quote:
Originally Posted by KDarling View Post

 They do not build ships.

 

What is this?

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post #37 of 41
Originally Posted by hill60 View Post
What is this?

 

A sold. Not a ship.

 

Get it right. lol.gif

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post #38 of 41
Quote:
Originally Posted by hill60 View Post

What is this?

 

Repeat:

 

Samsung Electronics does not build ships, so none of their $10 B of R&D that cnocbui was talking about in Post #30... and you replied about in Post #31... was used to design them.

post #39 of 41
Quote:
Originally Posted by KDarling View Post

I wish they had put the iPhone 5 up also just for relative comparison (since that's all this kind of vague info is good for).   So I grabbed both.   Looks like the display and sensors are the big extra expense.

 

It's quite doubtful that iSuppli or whoever's BOM estimate is accurate to ±$25 or even ±$50. [The second significant digit is likely no more accurate to ±2, maybe not even ±5.] The USA SGS4 BOM of $229 and the iPhone 5 BOM of $207 is for intents and purposes the same BOM.

 

You would think the SGS4 would cost more through sheer physical size. There's just more there: glass, display, battery, chips, etc. But it's basically all immaterial as the major driver in profitability also includes how it much costs to sell and maintain the devices and how effective they are at selling the device. The BOM is ~$200. The ASP for Apple's iPhone is ~$650. Apple made about 12b profit out of 54b of revenue in Q4 12. iPhone's profit margin is pretty large, so it's likely north of 20%. So, $200 in profit, $200 for BOM, leaves $150 for the cost of selling the device. All these numbers vary quarter to quarter.

 

So, quibbling over the estimating BOM differences of the two devices is way over analyzing it. You really can't say one is more expensive then the other. And just looking at the BOM is only 1/3 of the problem. Drilling further down, the small differences here are only 10% of the BOM. So, people are quibbling over about 3% of the money here. ;)

post #40 of 41
Quote:
Originally Posted by THT View Post

It's quite doubtful that iSuppli or whoever's BOM estimate is accurate to ±$25 or even ±$50.

 

Yep, that's why I said they're only good for relative comparisons, not exact ones.

Quote:
The ASP for Apple's iPhone is ~$650. Apple made about 12b profit out of 54b of revenue in Q4 12. iPhone's profit margin is pretty large, so it's likely north of 20%. So, $200 in profit, $200 for BOM, leaves $150 for the cost of selling the device. All these numbers vary quarter to quarter.

 

I think that's pretty darned close, although you're missing $100 on the BOM, which is why your numbers don't add up to $650.  Otherwise, that's almost exactly what I came up with not long ago:

 

  • $640 average iPhone price x (widely reported 53%) average iPhone gross profit margin
  • $340 gross profit per iPhone + $300 to build each iPhone (manufacturing, shipping, license fees).
 
Of the $340 gross profit, Apple's average reported expenses take up:
 
  • $20 - R&D  (6%)
  • $54 - selling, admin  (16%)
  • $68 - set aside for taxes  (20%) 
 
Leaving a total net profit per phone of:  $198 or  ~30% net profit margin.  
 
So, roughly, $300 for the phone, $140 cost of selling, $200 profit... same as what you came up with. 
 
The interesting part comes when you use those cost percentages with lower numbers to try to figure out how Apple can make a lower priced phone.  But that's a thread for another day.
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