Apple IPhone 4 Parts Cost About $188

Apple's iPhone 4 wireless handset includes components that cost as little as $187.51, according to market research firm iSuppli.

Materials and parts for Apple's (AAPL) iPhone, which went on sale on June 24, include a 3.5-inch LCD screen that Apple calls a "retina display." As the smartphone's most expensive component, it costs $28.50 and may have been made by LG Display (034220:KS), iSuppli says. The iPhone 4 sells for $199 and $299.

Research firms conduct so-called teardown analysis of consumer electronics products to determine component prices, identify suppliers, and estimate profit margins. Keeping iPhone-part prices low helps Apple wring higher profit from its bestselling product, which made up 40 percent of revenue last quarter.

"Over the years, the iPhone has generally tended to hover in the $170-to -$180 cost range because Apple seems to be trying to hit some kind of budget," Kevin Keller, who helped conduct the iSuppli teardown, says in an interview.

The estimate doesn't include costs for items such as labor, shipping, advertising, software development, or patent licensing. ISuppli analyzed a 16-gigabyte version of the iPhone 4. As with the iPad, Apple used an internally designed A4 processor that was made by Samsung Electronics (005930:KS) and costs an estimated $10.75, says El Segundo (Calif.)-based iSuppli.

no word on what ISPs are paying

Apple spokeswoman Natalie Kerris declined to comment on iSuppli's findings. John Lucas, a spokesman for Samsung, didn't return a call seeking comment.

Apple, based in Cupertino, Calif., and AT&T (T) offer the iPhone 4 for $199, while the 32-gigabyte model sells for $299. Apple doesn't disclose how much it gets for the device from AT&T, the exclusive U.S. iPhone carrier, or from service providers in other countries.

Suppliers include Broadcom (BRCM), which makes a wireless chip that handles Wi-Fi and Bluetooth connections on the device. Broadcom, based in Irvine, Calif., also supplies a chip to receive signals from global positioning system satellites used in navigation applications, replacing one that previously had been supplied by Infineon Technologies (IFX:GR) of Neubiberg, Germany.

Bill Blanning, a spokesman for Broadcom, didn't respond to calls seeking comment. Matthew Schmidt, a spokesman for Infineon, declined to comment.

touch-sensitive glass display

A component new to the iPhone is a gyroscope chip designed to detect how the phone moves in three dimensions and to make playing games seem more realistic. ISuppli said Geneva-based STMicroelectronics (STM:FP) supplied the gyroscope chip at an estimated cost of $2.60, as well as an accelerometer chip used in previous iPhone versions, which has an estimated cost of 65¢. Michael Markowitz, a spokesman for STMicroelectronics, declined to comment. John Taylor, a spokesman for LG Display, didn't respond to a request for comment outside business hours.

The glass overlaying the display that creates touch sensitivity is likely manufactured by two companies, Keller said. One is Wintek (2384:TT), based in Taichung Hsien, Taiwan. The other is TPK-Balda, a joint venture of Balda (BAF:GR), based in Bad Oeynhausen, Germany and TPK Holding, based in Xiamen, China. James Chen, a spokesman for Wintek, didn't return a message left outside of business hours. Clas Roehl, a spokesman for Balda, didn't return a message left outside of business hours.

Other component suppliers include Skyworks Solutions, a wireless chipmaker based in Woburn, Mass,, and TriQuint Semiconductor (TQNT), based in Hillsboro, Ore. Amanda Ingalls, a spokeswoman for Skyworks, and Shannon Rudd, a spokewoman for TriQuint, declined to comment.

In 2009, iSuppli estimated that the components and materials used in the iPhone 3GS cost about $179. The materials costs on that device have since dropped to $134 as the prices of certain components have declined, Keller said. The iPhone 3GS still sells for $99.

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