Estimated iPhone 6s build cost pegged at $211.50, iPhone 6s Plus at $236
Despite Tim Cook's harsh dismissal of "guesstimators," research firm IHS Technology claims Apple's latest iPhone 6s and 6s Plus hardware bears material costs of $211.50 and $236, respectively.
According to the firm's findings, Apple's new 3D Touch display was the most costly single component at $52.50 for the iPhone 6s Plus, followed by the A9 processor at $22 apiece, reports Re/code. Other key components include a 2GB DRAM module priced at $17, Qualcomm baseband chip for $13 and front and rear camera modules at $22.50.
Pricing for a 16GB NAND flash chip is estimated at $5.50, while iPhone's WLAN module and battery pack come in at $6 and $4.50, respectively. Combined cost for onboard audio hardware, NFC controller, accelerometer/gyroscope, barometer and compass come in at $18. Miscellaneous items like enclosures, circuit boards and connectors account for another $42, while assembly fees come out to $4.50 per device.
It appears IHS is hedging its bets after Cook slammed what he calls supply chain "guesstimators" in April, as Senior Research Director Andrew Rassweiler said his firm's numbers do not account for research and development, logistics, marketing and other costs. During Apple's quarterly conference call for the second quarter, Cook said he has never seen an estimated bill of materials breakdown "that's even close to accurate."
An initial teardown conducted last week showed iPhone 6s and 6s Plus share a largely unchanged internal layout in respect to last year's models. The overall dimensions increased slightly, as Apple had to make room for a thicker -- and much heavier -- 3D Touch display, while a decrease in battery size left space for the new Taptic Engine vibration mechanism.
Most recently Chipworks discovered Apple dual-sourced A9 SoC production from Samsung and TSMC, finding Samsung's 14nm fabrication process yields a chip 10 percent smaller than TSMC's design based on a 16nm FinFET process.
According to the firm's findings, Apple's new 3D Touch display was the most costly single component at $52.50 for the iPhone 6s Plus, followed by the A9 processor at $22 apiece, reports Re/code. Other key components include a 2GB DRAM module priced at $17, Qualcomm baseband chip for $13 and front and rear camera modules at $22.50.
Pricing for a 16GB NAND flash chip is estimated at $5.50, while iPhone's WLAN module and battery pack come in at $6 and $4.50, respectively. Combined cost for onboard audio hardware, NFC controller, accelerometer/gyroscope, barometer and compass come in at $18. Miscellaneous items like enclosures, circuit boards and connectors account for another $42, while assembly fees come out to $4.50 per device.
It appears IHS is hedging its bets after Cook slammed what he calls supply chain "guesstimators" in April, as Senior Research Director Andrew Rassweiler said his firm's numbers do not account for research and development, logistics, marketing and other costs. During Apple's quarterly conference call for the second quarter, Cook said he has never seen an estimated bill of materials breakdown "that's even close to accurate."
An initial teardown conducted last week showed iPhone 6s and 6s Plus share a largely unchanged internal layout in respect to last year's models. The overall dimensions increased slightly, as Apple had to make room for a thicker -- and much heavier -- 3D Touch display, while a decrease in battery size left space for the new Taptic Engine vibration mechanism.
Most recently Chipworks discovered Apple dual-sourced A9 SoC production from Samsung and TSMC, finding Samsung's 14nm fabrication process yields a chip 10 percent smaller than TSMC's design based on a 16nm FinFET process.
Comments
OS development costs
Development costs of the new NVMe storage controller.
Development costs of the A9, as well as paying for taping it out twice for two different processes.
Development costs of 3D Touch hardware.
Cost of changing the CNC's over to 7000 series aluminum, because of this they can't simply churn out cases for the 6 and 6S, they have to maintain two production lines.
But go ahead, IHS. Go ahead.
Quick! Cue the assholes whining about that’s how much it should cost! Because clearly, no other business expense matters at all.
With just some simple math using Apple’s own financial reports we get at least $310 gross cost on average per iPhone, excluding research and development, some logistics, marketing, salaries, etc.
Is it so difficult for them to say that they don’t know most of the costs? That they have no idea how much some components actually cost, or the manufacturing costs, etc!
This information is as inaccurate and useless as anything else an analyst has given us.
omg, were getting so ripped off!!1!
/s
Not included:
OS development costs
Development costs of the new NVMe storage controller.
Development costs of the A9, as well as paying for taping it out twice for two different processes.
Development costs of 3D Touch hardware.
Cost of changing the CNC's over to 7000 series aluminum, because of this they can't simply churn out cases for the 6 and 6S, they have to maintain two production lines.
But go ahead, IHS. Go ahead.
There's nothing wrong with their number. 1/3 of the price to build, 1/3 of the price to design, 1/3 of the price as profit.
I just looked up Cisco's gross margin. 60%. So roughly the same as Apple.
There's no reason why you can't intermix 7000 and 6000 Al easily on the same CNC machine. Hell, our shop runs steel, Al and copper back to back.
Since you don't like estimates of production costs, here's my estimate for the cost of producing one copy of Windows: $0.
Apple's gross margins aren't at 60%.
I don't have a problem with the people who publish this, I have a problem with the media outlets that willfully misreport this so you'll think Apple is charging you 3x cost. It's so stupid anyway because one can easily look up Apple's profit margins in their financial statements. In Apple's last 10-Q they reported a profit margin of 21.5%.A profit margin of 21.5% on a $649 phone would equate to total cost of around $509.
Exactly and to take that further - the 21.5% margin is across the product range, not just the $649 model. So even the people whining that memory upgrades should not be $100 per tier don't get it right. More likely Apple is selling the 16gig model at a lower margin and the 128gig at a higher margin with the mid range being the balance point.
(Disclaimer: I think the bottom tier should be 32gig)
(Disclaimer on my disclaimer: I also think the complainers don't consider that the middle tier is 64gig not 32gig, so really the $100 bump is double the value of what it could be)
(Disclaimer to the disclaimer disclaimer: Have any of these complainers gone out and bought a 64gig micro SDhc for their 16gig Android phone? How much is it eh for a fast and decent quality brand. $100AUD.. yeah........)
sorry got a bit off track there
Apple's gross margins aren't at 60%.
I was comparing their mobile products. It's lower because they sell lower margin products, specifically computers.
After dabbling with some manufacturing and Kickstarted projects, you typically need to keep your cost of materials and manufacturing between 30-35% of the final price. That's because you end up with a lot of sales and marketing related expenses further down the line. For instance, retailers probably want about 20-40% of the retail price for managing the sale. Then you end up needing to pay for tooling, R+D, support, marketing materials... and save a bit of profit.
In these cases, a price around $200-$250 seems reasonable for the end-product pricing.
Build cost at $236 is probably bang on for a $700 phone. The only bit that really irks me is the markup for storage space - it used 19nm toshiba (THGBX5G7D2KLFXG) stuff, and appears to be MLC (didn't apple used to use TLC?). That comes in at around $50 for 120GB and Apple seems to be charging twice that for increments of half the size.
I'd like to see smartphones one day coming out with 128GB or something standard across the board; with consumers given a choice of things like screen size, processor speed or amount of RAM. Stuff that could actually be worth paying $1-200 more for.
Why would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
I was comparing their mobile products. It's lower because they sell lower margin products, specifically computers.
No, it can’t be 60% margin for the iPhone because that would mean the iPad and Mac margins were less than 8%, which is obviously false.I don't see a problem with this at all. It's workout out somewhere around a third raw parts cost, a third profit according to financial statements, and the remaining third is presumably for all other associated development costs.
Build cost at $236 is probably bang on for a $700 phone. The only bit that really irks me is the markup for storage space - it used 19nm toshiba (THGBX5G7D2KLFXG) stuff, and appears to be MLC (didn't apple used to use TLC?). That comes in at around $50 for 120GB and Apple seems to be charging twice that for increments of half the size.
I'd like to see smartphones one day coming out with 128GB or something standard across the board; with consumers given a choice of things like screen size, processor speed or amount of RAM. Stuff that could actually be worth paying $1-200 more for.
that would mean bigger margins than Apple actually hasWhy would any of those things be included in "hardware material costs"? The article was very clear that it was the cost of the actual hardware they were reporting/guesstimating on.
Those other costs you mention - while absolutely valid - are fixed costs. They remain the same whether Apple sells 10,000 phones or 100 million phones. The costs reported in this article are supposed to be an approximation of how much it costs to manufacture each phone now that all of the R&D is done.
one of those costs would go into manufacturing cost - changing the CNC's over to 7000 series aluminum.as for the other ones you are correct
It's just a BOM. Yeah, it's not a lot of things, but a BOM means something pretty specific. I'm amused at how the article text is defensive about it, and yet gives no context in the form of a comparison to similar estimates of competing products.
yes it does mean something very specific, if you have real values. Any true bill of materials presents any cost with materials, not just the cost of a perfect project. It also must present real contracted values. For things that are proprietary to Apple, some of them manufactured to higher standards than normal, it becomes very hard to estimate costs for someone who doesn’t know how it is manufactured and tested.There is also the "small" problem that this guys present an assembly cost and fail to warn that it doesn’t include many of the manufacturing costs, such as machining, energy, etc.