Cost to build Apple's new iPhone 3G S estimated at $179

Posted:
in iPhone edited January 2014
Apple's component and manufacturing costs for its new 16GB iPhone 3G S falls within $5 of those required to build last year's 8GB iPhone 3G, this despite a doubling of the handset's built-in storage capacity and the addition of several new components, according to a new tear-down cost analysis.



Market research firm iSuppli, which specializes in dismantling new electronic gadgets to identify their key components and assembly costs, estimates Apple's bill of materials (or BOM) on the 16GB iPhone to be $172.46 with a manufacturing expense of $6.50, for a total of $178.96.



The assessment is slightly higher than the firm's estimate of $174.33 to manufacture the original 8Gbyte iPhone 3G based on pricing in July 2008 when that handset first hit the market. These estimates do not include other charges, such as the costs to develop the iPhone's software, shipping and distribution, packaging, royalty fees and miscellaneous accessories included with each iPhone.



It's also important to note that while Apple's wireless partners offers the 16GB iPhone 3G S for as little as $199 with two-year service agreements, the actual price of the phone paid by those providers is considerably higher, reflecting a common practice amongst carriers to subsidize the upfront cost of a new phones for consumers and then profit off high-margin service subscriptions.



"From a component and design perspective, there’s also a great deal of similarity between the 3G and the 3G S," said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. "By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost."



Still, the firm was able to identify a few key differences in component selection of the iPhone 3G S compared to the iPhone 3G introduced a year ago. For starters, it sports a new $5.95 single-chip Bluetooth/FM/WLAN device from Broadcom, first identified by AppleInsider back in April as the BCM4329. This combo chip takes the place of two separate chips required to perform the same functions in the iPhone 3G -- a Marvell WLAN chip and a Cambridge Silicon Radio Bluetooth integrated circuit -- signaling another industry trend by which device makers are moving to higher levels of integration and simultaneously reducing the footprint of their devices by sandwiching many functions into more compact multi-function chipsets.







Also new to the iPhone 3G is an azimuth sensor from AKM Semiconductor, which was also first identified by AppleInsider in May as the AK8973, a 16-pin leadless IC package measuring 4mm square and 0.7mm thick. When paired with STMicroelectronics’ accelerometer, which is a 3-axis device like the AK8973, the parts facilitate the iPhone's new digital compass feature. More specifically, the STMicroelectronics part allows the 3G S to determine device orientation or inclination, while the AKM sensor detects device movement relative to magnetic north, supporting the 3G S’s capability to reorient a map displayed on the screen to correspond with the direction the user is facing.







Also making its debut in the iPhone line is Dialog Semiconductor's $1.30 power management IC serving the 3G S’s Samsung applications processor, which replaces a corresponding NXP Semiconductors device in last year's iPhone 3G, according to iSuppli.



Meanwhile, the firm notes that although there was wide-spread speculation that Qualcomm might displace Infineon as the supplier of the iPhone's critical baseband chip, Infineon was able to hold onto its seat and is currently supplying Apple with its PMB8878 chip, which accounts for $13 of the 3G S's total component costs.* Similarly, TriQuint has reportedly kept its slot as the 3G power amplifier module supplier, supporting the tri-band HSPA functionality of the phone.







Generally speaking, Toshiba is believed to have scored the biggest single design win in the 3G S that iSuppli tore down, with its 16Gbyte Multilevel-Cell (MLC) NAND flash costing $24. However, Apple has long-term supply agreements with at least four other major flash memory suppliers who, including Hynix, Intel, Micron, and Samsung Electronics. Of these, Samsung has most likely been chosen to supply identical parts for a percentage of the iPhone 3G Ss that will be manufactured, as Apple has long sourced its iPhone flash memory from multiple suppliers.





*

Speaking of Samsung, the South Korean electronics maker also maintained its seat as iPhone’s primary SoC supplier, as numerous reports have previously confirmed. Priced at $14.46, the applications processor is the fourth most costly component in the iPhone 3G S after the NAND flash, the display module and the touch-screen assembly. It runs at 600MHz compared to the 400MHz version in the iPhone 3G.
«13456

Comments

  • Reply 1 of 114
    brucepbrucep Posts: 2,823member
    No product in apple history has ever made more profit than the iphone series .



    The large volume of sales makes all expenses nominal, Adding very little to the over all cost. The economies of scale bring a triple jackpot for apple .



    Lower cost per sold item for components and advertising.

    APP STORE pays for itself . or makes a profit.

    Itunes garners 10 MILLION or more new clients a year.

    all apple products shine much brighter. < halo effect >



    The imac will get the next overhaul. I can't wait.





    9
  • Reply 2 of 114
    Manufacturing costs. $6.50.
  • Reply 3 of 114
    And still no mention of the PowerVR SGX chip model number !
  • Reply 4 of 114
    dagamer34dagamer34 Posts: 494member
    Any idea on how much the 32GB flash chip costs? I would assume more than double the cost of the 16GB chip.
  • Reply 5 of 114
    Quote:
    Originally Posted by AppleInsider View Post


    Market research firm iSuppli, which specializes in dismantling new electronic gadgets to identify their key components and assembly costs, estimates Apple's bill of materials (or BOM) on the 16GB iPhone to be $172.46 with a manufacturing expense of $6.50, for a total of $178.96.



    Yet Italian cell companies TIM and Vodafone sell it (unsubsidized) for ?619 and ?719 (about $875 and $1,015). I don't need to comment on that.
  • Reply 6 of 114
    hmurchisonhmurchison Posts: 12,302member
    Quote:
    Originally Posted by dagamer34 View Post


    Any idea on how much the 32GB flash chip costs? I would assume more than double the cost of the 16GB chip.



    Probably they scale linearly pretty much from what i've seen.
  • Reply 7 of 114
    rot'napplerot'napple Posts: 1,839member
    Is that the standard cost of the supplies that tallied up to $179.00?



    I mean, if I ordered all the parts to assemble an iPhone, is that what I would be charge for all the components also or is that the price Apple pays because they expect to sell a few million of them and Apple gets a discount for the prices.



    Guess I'm wondering if the cost to build the 3Gs iPhone is less than 179 because those prices in the article are "retail" versus what agreement on prices Apple worked out with all the various component makers? \
  • Reply 8 of 114
    scoodogscoodog Posts: 12member
    There have been NUMEROUS complaints on Apple's discussion boards of the 3GS display not having the same color "pop" -- i.e. colors are dimmer and blacks are gray. I've noticed the same thing. It looks like Apple may be using a cheaper LCD in the 3GS. The LCD in the 3GS costs $19.95 per the article here.



    How much did the LCD in the 3G cost?
  • Reply 9 of 114
    Quote:
    Originally Posted by AppleInsider View Post


    For starters, it sports a new $5.95 single-chip Bluetooth/FM/WLAN device from Broadcom, first identified by AppleInsider back in April as the BCM4329.



    Well, from your own article, AppleInsider would have misidentified the chip since it isn't the BCM4329, but the BCM4325 as clearly highlighted in the iSuppli picture in the article. Sadly that means no hidden 802.11n functionality.



    Quote:
    Originally Posted by scoodog View Post


    There have been NUMEROUS complaints on Apple's discussion boards of the 3GS display not having the same color "pop" -- i.e. colors are dimmer and blacks are gray. I've noticed the same thing. It looks like Apple may be using a cheaper LCD in the 3GS. The LCD in the 3GS costs $19.95 per the article here.



    How much did the LCD in the 3G cost?



    Maybe it's the new coating distorting the colours?
  • Reply 10 of 114
    Does thisa mean that the 3gs has an fm radio thats disabled but can be enabled via 3rd parties?
  • Reply 11 of 114
    mr. hmr. h Posts: 4,740member
    Quote:
    Originally Posted by Rot'nApple View Post


    Is that the standard cost of the supplies that tallied up to $179.00?



    I mean, if I ordered all the parts to assemble an iPhone, is that what I would be charge for all the components also or is that the price Apple pays because they expect to sell a few million of them and Apple gets a discount for the prices.



    No, they aren't the prices you'd pay. For you to get those components from somewhere like digikey would probably cost you more than the unsubsidised price of a new iPhone, if you could get them at all.



    The prices are iSuppli's "intelligent guesses" as to what Apple pays. To a degree, the teardowns are pointless as only Apple and their suppliers know how much Apple pays for the parts.
  • Reply 12 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by majortom1981 View Post


    Does thisa mean that the 3gs has an fm radio thats disabled but can be enabled via 3rd parties?



    Only if the right pins were connected in hardware. Probably the critical one would be the antenna connection to the headphone jack. I'd say that would be definitely missing.



    So the answer is no, unless you want to get out your soldering iron.
  • Reply 13 of 114
    al_bundyal_bundy Posts: 1,525member
    Quote:
    Originally Posted by dagamer34 View Post


    Any idea on how much the 32GB flash chip costs? I would assume more than double the cost of the 16GB chip.



    why?



    it's normal to buy twice the storage at the same price as time goes on



    few months ago i priced out some HP servers with 32GB of RAM. They take up to 64GB. The 32GB cost $1500 while 64GB would cost $7000 due to the fact that the higher density chips command a premium. Next year the price is going to fall so if we need more memory we'll buy the 64GB then. 2 years ago 32GB cost around $15000
  • Reply 14 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by Mr. H View Post


    No, they aren't the prices you'd pay. For you to get those components from somewhere like digikey would probably cost you more than the unsubsidised price of a new iPhone, if you could get them at all.



    The prices are iSuppli's "intelligent guesses" as to what Apple pays. To a degree, the teardowns are pointless as only Apple and their suppliers know how much Apple pays for the parts.



    Yeah, chances are they pay much less. They are pretty fierce negotiators.
  • Reply 15 of 114
    pg4gpg4g Posts: 383member
    Quote:
    Originally Posted by majortom1981 View Post


    Does thisa mean that the 3gs has an fm radio thats disabled but can be enabled via 3rd parties?



    No. Developers need API's written by Apple to give access. For example, bluetooth has always been in every iPhone but access was not allowed. Simply, developers have no way to talk to that chip directly and circumvent Apple's lockout.
  • Reply 16 of 114
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by brucep View Post


    The imac will get the next overhaul. I can't wait.





    9



    Me neither. When do you think it will happen?
  • Reply 17 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by al_bundy View Post


    why?



    it's normal to buy twice the storage at the same price as time goes on



    few months ago i priced out some HP servers with 32GB of RAM. They take up to 64GB. The 32GB cost $1500 while 64GB would cost $7000 due to the fact that the higher density chips command a premium. Next year the price is going to fall so if we need more memory we'll buy the 64GB then. 2 years ago 32GB cost around $15000



    Uh, but we're pricing them at the same moment, so it's a perfectly reasonable assumption. It could be a little more than twice though because you may pay a price premium for higher density. Then again if the 32GB part is made in higher volume i could actually be less than twice the price. I doubt it though.
  • Reply 18 of 114
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by PG4G View Post


    No. Developers need API's written by Apple to give access. For example, bluetooth has always been in every iPhone but access was not allowed. Simply, developers have no way to talk to that chip directly and circumvent Apple's lockout.



    Yes they do, it's called jailbreaking.
  • Reply 19 of 114
    Quote:
    Originally Posted by scoodog View Post


    There have been NUMEROUS complaints on Apple's discussion boards of the 3GS display not having the same color "pop" -- i.e. colors are dimmer and blacks are gray. I've noticed the same thing. It looks like Apple may be using a cheaper LCD in the 3GS. The LCD in the 3GS costs $19.95 per the article here.



    How much did the LCD in the 3G cost?



    Interesting... I find the colors on my 3G S to pop MORE than my 3G when they are side by side...
  • Reply 20 of 114
    shanmugamshanmugam Posts: 1,200member
    Quote:
    Originally Posted by teckstud View Post


    Me neither. When do you think it will happen?



    mostly an event in first weeks September with



    1) Snow Leopard release date

    2) iPod update

    3) iMac update with some quad config and shipping with Snow Leopard
Sign In or Register to comment.