iPad Air 2 costs Apple $275 to build

image iPad Air 2 official

According to the research firm IHS iSuppli, the new 16GB iPad Air 2 costs Apple only a 1$ more to make than last year’s iPad Air.

The base model of the new iPad Air 2 carries a component cost of $275 while the iPad Air last year had a component cost of $274. On the other hand, the highest end 128GB model with LTE costs Apple $358 to make.

The most expensive component inside the new iPad is its 9.7-inch Retina Display with a price tag of $77. It is made by Samsung or LG and is optically bonded, and comes with an anti-reflective coating that greatly improves its usability. Apple had used the same display in the last year iPad Air as well and at that time it had costed the company $90 apiece.

According to IHS analyst, Andrew Rassweiler, the 8MP iSight camera on the iPad Air 2 is similar to the one that is found inside the iPhone 6 and iPhone 6 Plus except that it lacks Optical Image Stabilisation (OIS) and comes with a higher aperture lens. The combined cost of the front and rear camera of the Air 2 comes in at a measly $11.

The biggest change in the iPad Air 2 is the A8X chip from Apple. IHS suggests that Apple has shifted some of the production of the chip to TSMC and away from Samsung just like it did with the A8 chip found inside the iPhone 6 and iPhone 6 Plus.

The report also suggests that Apple pays $9.20 for a 16GB flash memory chip and as much as $60 for the 128GB chip. However, the company charges consumers more than $300 extra for the 128GB variant of iPad Air 2. In the end though, the report suggests that Apple profit margin on the iPad Air 2 has dipped from anywhere between 45 to 61% to 45 to 57% because of the $100 price cut on the higher-end variants.

Keep in mind that this report estimates the profit margin of Apple solely on the components cost. It does not include many other overheads including licensing, patent fees, transportation charges and more. Nevertheless, the estimated bill of materials provides an interesting perspective on the estimated profit margins that Apple stands to make from the sale of the new iPad Air 2.

[Via Re/code]