Slightly better components means it costs Apple $16 more to make an iPhone 6s Plus than it does to make an iPhone 6s — but the company is making a sizable profit on every device it sells. IHS estimates that it costs just $236 to make a 16GB iPhone 6s Plus, which sells for $749.
That’s a profit of $513 on every handset sold — before we consider things like marketing, packaging, research and development, and the many other things that go into manufacturing, distributing, and selling a smartphone.
“3D Touch and Apple’s Taptic engine are among the more notable feature upgrades found in this latest round of iPhones,” said Andrew Rassweiler, senior director of cost benchmarking services for IHS Technology. “With each generation the company makes measured, incremental technology improvements to its iPhone line, and this time around those changes are increasing Apple’s per-unit material cost.”
The increased cost is in part to more robust materials. Apple is building its latest iPhones out of stronger Series 7000 aluminum and more durable Ion-X glass, which makes them more robust and more likely to last. The new iPhones also have “additional gaskets and seals that improve water resistance,” IHS says, which explains why they do sell in water tests.
The new A9 processor has also increased the cost of Apple’s latest devices, as have new LTE radios that allow for LTE-Advanced connections, and upgraded cameras. 3D Touch and the new Taptic engine also combine to add around $10 to the total bill of materials, IHS reveals.
Apple has saved money in other areas, however. The controversial 16GB memory option everyone was hoping Apple was drop this year is now $6 cheaper per NAND flash unit.
Apple makes a surprisingly large sum on NAND flash chips; while customers are charged $100 to upgrade from a 16GB to a 64GB model, Apple only pays about $17 more for the larger option. This makes its decision not to swap the 16GB model for a 32GB model even more frustrating.
It should be noted again that that the cost estimated by IHS considers only materials and labor. There is no deduction for things like marketing, distribution, software development, and more.[via BusinessWire]