iPhone 4S Costs $188 To Manufacture

iPhone 4S

Electronics market research firm, IHS iSuppli, has published results from a teardown study where the company has looked into the costs incurred by Apple in manufacturing the latest iPhone.

IHS iSuppli has revealed that a 16GB iPhone 4S carries a Bill of Materials (BOM) cost of about $188 compared to iPhone 4’s $187.51.

This is not the first time IHS iSuppli has conducted such a study. The company has published their BOM estimates for several popular gadgets including iPhone 3GiPhone 3GS, iPhone 4iPad and iPad 2 in the past. BOM estimates play an important part in studying the impact of a product launch on the company’s revenues. Apple has traditionally maintained low component costs on the iPhone which has helped Cupertino enjoy higher profit margins.

Last year, the BOM material for iPhone 4 had gone up slightly, however it looks like Apple has managed to keep the costs at the same level despite adding new features such as Apple’s A5 chip and vastly improved camera. You may note that the BOM estimate for the lower end iPhone 3G and iPhone 3GS were estimated to be $174.33 and $178.96 respectively.

Here’s some highlights from iSuppli’s teardown analysis:

  • iPhone 4S retina display continues to be one of the most expensive components. The estimated cost of the retina display is $23.
  • iSuppli was surprised to find out that the NAND Flash was supplied by South Korean memory manufacturer Hynix in their iPhone 4S. Though Toshiba also seems to be supplying NAND Flash for iPhone 4S based on iFixit’s teardown. iSuppli estimates that the memory subsystem used in the 16GB iPhone 4S costs $19.20, making it the second most expensive single component after the display. The estimated cost of the NAND rises to $38.40 in the 32GB iPhone 4S and to $76.80 in the 64GB iPhone 4S, making it the most expensive set of components in the system in the respective devices.
  • MacRumors reports that the noise cancellation chip from Audience that was first included in iPhone 4 is missing in iPhone 4S, suggesting that Apple may have integrated it in the A5 chip. IHS iSuppli estimates that the A5 chip, which continues to be manufactured by Samsung, costs Apple about $15.
  • iPhone 4S’s vastly improved costs $17.60 according to iSuppli, though they were not able to confirm if the camera module was supplied by Sony.
Do note that iSuppli’s BOM estimates do not include costs rising from labor, shipping, advertising, software development or patent licensing and so the overall costs are expected to be much higher. Nevertheless, the teardown analysis provides an interesting perspective on the estimated profit margins that Apple stands to make from the sale of iPhone 4S. What are your thoughts?

[via IHS iSuppli, MacRumors]