iPhone 5s Component Costs Estimated to Begin at $199

[MacRumors]

IHS Suppli has released its estimate of the component costs involved in building the iPhone 5s, performing a virtual teardown based on information revealed by Apple and industry knowledge. The estimate, which does not include numerous other costs involved in product development, manufacturing, and sales, such as research and development, software, patent licenses, marketing, and distribution expenditures, pegs the component cost of the 16 GB iPhone 5s at $199.

The full report has not yet been released but AllThingsD received early access.

Apple spends at least $191 on components to build a 16 gigabyte iPhone 5s. The cost rises to $210 for a 64GB unit. The cost of assembly adds another $8 per unit, bringing the range to between $199 and $218.

That cost estimate is pretty close to that of the original iPhone 5, which IHS pegged at about $205 last year. Without a contract, the iPhone sells at prices ranging from $649 to $849, depending on storage capacity.

The bill of materials includes $41 for the iPhone 5s display, $32 for the RF chips, $7 for the fingerprint sensor, and $19 for the A7 chip manufactured by Samsung. The report says the cheaper iPhone 5c costs between $173 and $183, with the A6 processor costing $13.

However, from a material perspective, the iPhone 5c and 5s are very similar. With the exception of the fingerprint sensor, A7 processor and "some newer memory chips that consume less power", IHS analyst Andrew Rassweiler says they are "basically the same".

However, Apple appears to have spent "a lot of time and money combining [radio frequency] chips", says Rassweiler. "Apple seems to be pushing its RF suppliers to do things they don't do for anyone else."

Those vendors, according to IHS's analysis, are Qualcomm, Skyworks, Avago, RF Micro Devices and TriQuint Semiconductor, all of which make chips that handle different aspects of the iPhone's connections to various wireless networks. These efforts toward getting the radio frequency chips to work together have the effect, Rassweiler said, of allowing the phones to support more frequency bands in a single phone than before. "The iPhone 5 supported no more than five LTE bands. The 5s and 5c can support as many as 13, and that's unique," he said. "Unlike other phone designers, Apple has spent a lot of time collaborating with the RF chip companies to find novel solutions that its competitors don't have."

Some older generations of iPhones required a number of different models to cover all the different cellular frequencies, but Rassweiler says the progress Apple has made on RF chips suggests the company may soon be able to produce a single iPhone model that works on all cellular frequencies, increasing economies of scale significantly.

The full IHS Suppli report should be released tomorrow.

Article Link: iPhone 5s Component Costs Estimated to Begin at $199

 

[HatterZero]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

 

[Curun]

It's always worth mentioning. Apple does not profit $451 per device.

The component cost is only a fraction considering R&D Engineer/HR/Legal/etc hourly wages during development time at CA wages and development tools and resources, and on and on and on.

 

[shootingrubber]

Apple is doomed

 

[keysofanxiety]

I wonder what Samsung's manufacturing costs for the S4 are? However, unlike the 5s, they come in considerably more colours.

 

[bradl]

Let's do some quick math here, and let's assume it costs the same to make each model, and assume all are 64GB. And assume no other payouts are being done for R&D, shipping, labour, etc.

For the first weekend of its release:

$199 * 5,000,000 = $995,000,000

$649 * 5,000,000 = $3,245,000,000

$3,245,000,000 - $995,000,000 = $2,250,000,000

Assuming all 64GB, Apple banked 2.25 billion over opening weekend alone for a 64GB 5s.

Holy smeg.

BL.

 

[alent1234]

i wonder what samsung's manufacturing costs for the s4 are? However, unlike the 5s, they come in different colours.

image

estimate is $225 but they make a lot of the parts so they are just passing money from one department to another

 

[flash84x]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

Well, at least MacRumors made that clear.

The estimate, which does not include numerous other costs involved in product development, manufacturing, and sales, such as research and development, software, patent licenses, marketing, and distribution expenditures, pegs the component cost of the 16 GB iPhone 5s at $199.

 

[sikkinixx]

THEN WHY DOESN'T APPLE SELL THEM FOR $250?! THAT'S PLENTY OF PROFIT THEY ARE RIPPING US ALL OFF

[/sarcasm]

 

[CausticPuppy]

the progress Apple has made on RF chips suggests the company may soon be able to produce a single iPhone model that works on all cellular frequencies, increasing economies of scale significantly.

This is the type of innovation that doesn't get mentioned in the press because it isn't sexy enough.

It's entirely possible that there will only be one model of iPhone 6 that will work all around the world on every supported carrier (in your choice of color, of course). Is anybody else pursuing this as well?

Hell, Samsung even sells the GS4 with different CPUs for different markets around the world. Talk about fragmentation...

 

[blackhand1001]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

The cost of labor is pretty negligible. A group of several workers makes tens if not hundreds of phones an hour.

 

[scottwaugh]

This is the type of innovation that doesn't get mentioned in the press because it isn't sexy enough.

It's entirely possible that there will only be one model of iPhone 6 that will work all around the world on every supported carrier (in your choice of color, of course)....

This is impressive, maybe with the 6 we'll be back to the one version that covers everything (we had that with the 4s didn't we - before LTE?), that will be nice.

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

Well I wouldn't worry too much. This is about the same for all the higher end phones - a little over $200-ish. I remember seeing estimates for the newer Moto X (which sells in that same range as the 5s), with its somewhat mid range specs, is in this area as well.

 

[FFArchitect]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

Agreed, however the freedom to *not* purchase, plus information, plus choice, precludes a true ripoff from ever happening. Same is true for many things (excluding utilities).

 

[ee13lbp]

It's always worth mentioning. Apple does not profit $451 per device.

The component cost is only a fraction considering R&D Engineer/HR/Legal/etc hourly wages during development time at CA wages and development tools and resources, and on and on and on.

They said this in the article though- a bit hasty with the comment hm?

 

[BaldiMac]

Let's do some quick math here, and let's assume it costs the same to make each model, and assume all are 64GB. And assume no other payouts are being done for R&D, shipping, labour, etc.

For the first weekend of its release:

$199 * 5,000,000 = $995,000,000

$649 * 5,000,000 = $3,245,000,000

$3,245,000,000 - $995,000,000 = $2,250,000,000

Assuming all 64GB, Apple banked 2.25 billion over opening weekend alone for a 64GB 5s.

Holy smeg.

BL.

$649 is the price of the 16GB iPhone 5S.

 

[jrswizzle]

Let's do some quick math here, and let's assume it costs the same to make each model, and assume all are 64GB. And assume no other payouts are being done for R&D, shipping, labour, etc.

For the first weekend of its release:

$199 * 5,000,000 = $995,000,000

$649 * 5,000,000 = $3,245,000,000

$3,245,000,000 - $995,000,000 = $2,250,000,000

Assuming all 64GB, Apple banked 2.25 billion over opening weekend alone for a 64GB 5s.

Holy smeg.

BL.

Not very smart assumptions.....

Taking into account Apple's margins generally fall in the 35-40% range, one could likely assume given a $199 BOM and a $649 MSRP for the 16GB, there's about $188+ that goes into various other costs PER device (R&D, shipping, marketing etc...).

So if Apple sold 7 million 5s's (which is a more accurate estimate):

7,000,000 * $649 = $4.543 Billion

- costs to build (7,000,000 * $199 = $1.393 B) = $3.15 B

-costs to market/develop/ship (7,000,000 * $188 = $1.316 B)


= $1.834 BILLION in revenue on the 5s last weekend

But even this only estimates 16 GB models and likely doesn't account for ALL costs. Still not bad if they fell a little short of this.

 

[DudeDad]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

Agreed...adding just the labor costs increases it to $200....

 

[Tux Kapono]

What I don't understand is the $19 cost difference between the 16GB and 64GB, and the $200 price difference. Same R&D, shipping, labor, marketing, etc. costs there.

 

[69650]

Even adding in all the extras they still make a very healthy profit on each device. However, if enough people are willing to pay that price who can blame Apple for cashing in. There are enough cheaper alternatives to chose from if someone doesn't want to go down the iPhone route. Freedom of choice to spend your money how you want is a wonderful thing.

 

[MacDarcy]

Wow. Nice margins. Why be upset with Apple tho? They're a business. Besides, they aren't the only ones marking up their smartphones. Android does the same thing. People pay what the market will bare. And its obvious people cannot do without their smartphones, and are willing to pay.

 

[djrod]

It's always worth mentioning. Apple does not profit $451 per device.

The component cost is only a fraction considering R&D Engineer/HR/Legal/etc hourly wages during development time at CA wages and development tools and resources, and on and on and on.

Sure, but Apple do rip us off respect storage:

"$191 on components to build a 16 gigabyte iPhone 5s. The cost rises to $210 for a 64GB unit"

They charge $200 for something that costs them $19, that's quite a profit they make there

 

[Count Blah]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

And what would you say of the "R & D costs, shipping costs, and labor costs" associated with the $19 upgrade from 16Gigs to 64Gigs in the 5s? Apple charges $200 for this.

But hey, no one ever said that living in Apple's negativity-free RDF is easy. Right?

 

[Rogifan]

These articles never take into thought of R & D costs, shipping costs, and labor costs. So now we will have 30 pages of apple is ripping people off posts

Good for page views though.

 

[Hakone]

Rise, profits, rise!

 

[Technarchy]

Sure, but Apple do rip us off respect storage:

"$191 on components to build a 16 gigabyte iPhone 5s. The cost rises to $210 for a 64GB unit"

They charge $200 for something that costs them $19, that's quite a profit they make there

No one ripped you off. Don't like it, don't buy. Pretty simple.