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IHS Suppli Teardown: The iPhone 5 Costs Between $207 and $238 To Manufacture

We have reported earlier about iPhone 5 BOM estimates, since the device wasn't available in the stores at the time, the $167 BOM remained just a virtual teardown. Meanwhile the iPhone 5 launched in nine countries -- and disappointed analysts -- so IHS Suppli took the device apart following the iFixit and Chipworks example. They then published the real bill of materials. Turns out that the iPhone 5 costs between $207 and $238 to manufacture.

iPhone 5
The real teardown of the most awaited smartphone ever, revealed some surprises as noted by Chipworks with the first Apple A6 SoC. Now, thanks to the guys from IHS Suppli, we have a clearer image about how much Apple pays for each device. As the report highlights, the entry level iPhone 5 with 16GB memory, carries a bill of materials of $199. The costs goes up to $207 and if we add manufacturing expenses, the 32GB version cost goes to $209 to manufacture. Meanwhile, the 64GB version carries a total cost of $230.

“The iPhone 5 exhibits a great deal of similarity to the iPhone 4S in terms of component suppliers,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “But beyond this superficial resemblance, there are some critical changes to product design and parts that enable major upgrades that improve user experience. These range from the faster applications processor, to the larger display, to the high-speed 4G LTE air interface. And beyond some of the high-profile changes that bring obvious benefits in performance and features, there are myriad upgrades and enhancements to virtually every component and subsystem in the iPhone 5.”

However, IHS Suppli report covers only the hardware and manufacturing costs and doesn't include software, licensing, royalties or expenditures which obviously add more to the total cost of a single iPhone 5.

Interestingly to note is that the iPhone 5 display is provided by Japan Display or LG Display, as an IHS Suppli comment emphasizes. There isn't much change among suppliers, but this is the first time that SanDisk NAND is on board the iPhone. Samsung, not SanDisk Corp, manufactured the previous generation NAND flash memory. However, this doesn't mean SanDisk is the only supplier, as the part is available from multiple manufacturers in the Apple supply chain, such as Samsung, Hynix or Toshiba.

iPhone 5

Kevin Keller, IHS Suppli's senior principal analyst, notes that Apple seems to go in the opposite direction when compared to other smartphone manufacturers. Most of them try to simplify designs by minimizing the total number of mechanical parts and fasteners in their products, while Apple has increased the mechanical parts since the iPhone 4S, the result being a very complex assembly. However, Apple can achieve low manufacturing costs due to "its capability to leverage its vast army of low-cost labor", Keller added.

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