Teardown reveals iPad mini yields 43% gross margin for Apple
In a teardown of Apple's new iPad mini over the weekend, IHS iSuppli analysts found the base 16GB Wi-Fi only model to cost about $188 to build, meaning the device could yield a gross profit margin of 43 percent, depending on variable factors like shipping costs.
By factoring Apple's $188 bill of materials, or BOM, and manufacturing costs against the low-end 16GB Wi-Fi version's $329 price tag, it can be concluded that the unit is netting the company 43 percent margins on the high end.
Source: IHS iSuppli via AllThingsD
The teardown, as reported by AllThingsD, also found the 32GB and 64GB iterations to cost Apple an additional $15.50 and $46.50 in storage, respectively, bringing profit margins for those models up to 52 percent and 56 percent.
The flash memory found in the test unit was determined to be from South Korean chipmaker Hynix, while Japan's Elpida provided the system memory. These components were previously purchased from Samsung, however Apple appears to be diversifying its supply chain to include smaller manufacturers, a move most recently seen in the iPhone 5.
Besides the configurable memory options, the firm found the mini's 7.9-inch display and corresponding components to cost around $80, representing about 43 percent of the total BOM. It was previously reported that the panels being sourced from LG Display and AU Optronics are using GF2 technology, which raised per unit costs due to manufacturing challenges. IHS analyst Andrew Rassweiler said the price should come down as production of the thin screens normalizes.
Rassweller noted the usual lineup of chips seen in other iOS devices made their way into the mini, including Cirrus Logic audio silicon, STMicroelectronics accelerometer, and a Murata-assembled wireless communications package holding chips made by Broadcom.
By factoring Apple's $188 bill of materials, or BOM, and manufacturing costs against the low-end 16GB Wi-Fi version's $329 price tag, it can be concluded that the unit is netting the company 43 percent margins on the high end.
Source: IHS iSuppli via AllThingsD
The teardown, as reported by AllThingsD, also found the 32GB and 64GB iterations to cost Apple an additional $15.50 and $46.50 in storage, respectively, bringing profit margins for those models up to 52 percent and 56 percent.
The flash memory found in the test unit was determined to be from South Korean chipmaker Hynix, while Japan's Elpida provided the system memory. These components were previously purchased from Samsung, however Apple appears to be diversifying its supply chain to include smaller manufacturers, a move most recently seen in the iPhone 5.
Besides the configurable memory options, the firm found the mini's 7.9-inch display and corresponding components to cost around $80, representing about 43 percent of the total BOM. It was previously reported that the panels being sourced from LG Display and AU Optronics are using GF2 technology, which raised per unit costs due to manufacturing challenges. IHS analyst Andrew Rassweiler said the price should come down as production of the thin screens normalizes.
Rassweller noted the usual lineup of chips seen in other iOS devices made their way into the mini, including Cirrus Logic audio silicon, STMicroelectronics accelerometer, and a Murata-assembled wireless communications package holding chips made by Broadcom.
Comments
Originally Posted by AppleInsider
Teardown reveals iPad mini yields at least 42% gross margin for Apple
Nope.
Quote:
Originally Posted by Tallest Skil
Nope.
Close. If starting BOM is $188, then subtract that from $329 & you get a difference of $142. $142 is approximately 43.16% of $329. That's a decent starting gross margin.
This is simply a raw parts cost, nothing else.
If the sales numbers are below expectations Monday this would give some wiggle room to lower the price. Holiday sale time soon.
Quote:
Originally Posted by SeaNorse
If the sales numbers are below expectations Monday this would give some wiggle room to lower the price. Holiday sale time soon.
I admire your optimism.
Let me save you from some disappointment though. It's not gonna happen.
Quote:
Originally Posted by SeaNorse
If the sales numbers are below expectations Monday this would give some wiggle room to lower the price. Holiday sale time soon.
$20 off for Apple's black friday sale!
BOM now equals gross margin?
Quote:
Originally Posted by paxman
I am sure they understand - it's just not what they do. They simply break the thing down and tell you how much the parts are costing Apple. Period.
Maybe they understand, but it seems that a lot of other people don't.
Quote:
Originally Posted by SolipsismX
BOM now equals gross margin?
(BOM / Selling price) x 100
Good luck with that.
Quote:
Originally Posted by Shameer Mulji
Close. If starting BOM is $188, then subtract that from $329 & you get a difference of $142. $142 is approximately 43.16% of $329. That's a decent starting gross margin.
Not what Tallest Skil meant by "Nope". Selling price of $329 is indeed a 43% profit margin on $188 - but that's the highest profit estimate, not the lowest, since it doesn't take into account R&D, shipping costs, etc. The article title should read "Teardown reveals iPad mini yields at most 43% gross margin for Apple", difference emphasized.
((selling price-BOM)/Selling price) * 100
gross margin is not supposed to tke into account R&D
Quote:
Originally Posted by arch
gross margin is not supposed to tke into account R&D
My argument was not about gross margin vs profit, but least vs most.
profit margin and gross profit margin are two different things! AI also doesnt seem to get this right
i agree with most. AI editor should read the wiki page on gross margin and net margin at least before attempting such an article.