IPhone 5 Costliest to Make Since Original Model, IHS Data Shows
Apple Inc. (AAPL)’s latest model iPhone 5 is the company’s most expensive handset to manufacture since the first version was released in 2007, according to data from market researcher IHS iSuppli.
A larger, more-advanced screen and faster wireless chips drove the materials and manufacturing cost of the 16 GB entry- level iPhone 5 to $207, the El Segundo, California-based researcher said in a statement based on preliminary estimates. That’s the most expensive since Apple unveiled the iPhone in 2007, which iSuppli estimated at the time had material costs of $246 for a 4 GB version.
Apple, which gets about two-thirds of its profit from handsets, said it pre-sold 2 million units of the iPhone 5 in one day, more than double its previous record. Although production costs are the highest in three years, manufacturing and bill-of-materials expenses for the entry-level model are 32 percent of the non-contract sales price of $649, according to iSuppli estimates.
“While the price of some components, such as NAND flash, has fallen during the past year, the iPhone 5’s overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S,” iSuppli said.
The estimates are based on a “virtual teardown” and may be amended after a physical examination of the device and its components, the researcher said. Deliveries of the new model begin Sept. 21.
Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment. The Cupertino, California-based company doesn’t currently list non-contract prices for the iPhone 5 on its U.S. website, with orders only available through contracts with carriers.
Materials for the cheapest of the new handsets, with 16 gigabytes of storage, total $199 and manufacturing cost is $8, according to iSuppli. The combined cost rises to $238 for the 64 GB version, which sells for $849, because the extra storage is more expensive, according to the researcher’s preliminary analysis based on known suppliers and prices for components, it said.
The cheapest version of Apple’s original iPhone, unveiled in 2007, had 4 Gigabytes of storage, one-quarter the amount of the least-expensive iPhone 5. A more expensive version of the original, with 8 GB, had parts and manufacturing costs of $265.83, iSuppli said in a follow-up to its earlier analysis.
Apple has in the past criticized similar cost analysis of its devices.
“Don’t put a lot of credence in these third-party reports that you see,” Apple CFO Peter Oppenheimer said in a July 20, 2010 investor conference call. “It’s always amazing to me the cost categories and the components that never seem to make it into the reports.”
The analysis doesn’t include software, royalty, licensing and other expenses, iSuppli said. Costs estimates also exclude research, marketing, administrative and other expenses incurred by Apple in designing and selling its products.
Combined costs of wireless chips climbed to $34 from $24 for the iPhone 4S, while the display and touchscreen costs $44 compared to $37 for the prior version, iSuppli said.
Falling prices of memory chips cut the cost of storage for the most-expensive model, with 64 GB, by 45 percent from the 4S model to $41.60 in the latest version, it said. The cheapest iPhone 4S had a materials and manufacturing cost of $196, it said in October.
To contact the reporter on this story: Tim Culpan in Taipei at firstname.lastname@example.org.