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Apr 12, 2001
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iphone_6_6_plus_comp-250x376.jpg
As it routinely does for new devices, IHS iSuppli has taken apart the iPhone 6 and iPhone 6 Plus in an effort to estimate Apple's costs for the components included in the new devices, sharing the results with Re/code. According to IHS iSuppli's teardowns, parts and labor costs for the iPhone 6 are estimated to begin at $200 for the 16 GB iPhone 6 model, giving Apple a roughly 69 percent gross profit margin on the devices.

That number of course does not take into account an array of other costs, from research and development to software to marketing and distribution, but it does offer an interesting glimpse at what goes into an iPhone.
The margins are in line with more recent iPhone models but higher than the earliest ones. The gross margin on the iPhone 5, released in 2012, and the iPhone 5s, released last year, were about 69 percent, teardown studies at the time of their release showed. On the lower-priced iPhone 5c, also released in 2012, the gross margin was closer to 68 percent. By comparison, the gross margin on the very first iPhone, released in 2007, was closer to 55 percent.
Apple does earn slightly higher margins on higher-capacity iPhone 6 models, as the 128 GB of storage is estimated to cost $47 more than the base 16 GB storage while the device retails for $200 more.

The iPhone 6 Plus is also a higher-margin item for Apple, with IHS iSuppli estimating the device costs just $16 more to produce than the corresponding iPhone 6 models, with roughly half of that difference coming from the display and the remainder presumably related to the rear camera module with optical image stabilization, a larger battery, and other minor differences.

Another interesting observation from IHS iSuppli is that Samsung does indeed remain involved in production of the main A-series processor for the iPhone. Early teardowns had shown the iPhone 6 and 6 Plus using A8 chips manufactured by TSMC for the first time, but IHS iSuppli says TSMC is providing 60 percent of A8 chips while Samsung is handling the remaining 40 percent.

Article Link: iPhone 6 Component Costs Estimated to Begin at $200, Samsung Supplying Some A8 Chips
 

chrmjenkins

macrumors 603
Oct 29, 2007
5,322
154
CA
Not surprising since 20nm is fairly new. Costly move for Apple though - verifying the design on two different processes. I'm sure they're paying a premium for those 20nm wafers.

200 seems pretty expensive. Profit margins going up is a plus for apple though.

The same.
 
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exodiusprime

macrumors regular
Jun 24, 2010
159
133
Dallas, TX
... and this is why the 16GB will continue to sell, possibly lasting til the next generation 6 "S" or whatever it may be called.
 
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Blue Fox

macrumors 6502a
Apr 13, 2009
509
52
I would really like to know how much R&D for something like this would cost. Easy to say "it only costs $200 to make one", but that's just the starting point of any product. R&D, manufacturing, tooling etc. Would be neat to know exactly the cost that goes into these.
 
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6836838

Suspended
Jul 18, 2011
1,536
1,325
Completely pointless test, as it's doesn't capture R&D costs.

You might as well price up raw glass, metal and plastic...
 
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XboxMySocks

macrumors 68020
Oct 25, 2009
2,216
173
At least this article addresses the fact that it doesn't cost $200 to make an iPhone 6 - millions went into R&D and testing and such.
 
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pblogic

macrumors newbie
Sep 23, 2014
1
0
On my way to MacRumors I thought, the iPhone 6 is out, maybe I'll get a day or two without stories about the iPhone dominating the news feed. Nope.....
 
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tevion5

macrumors 68000
Jul 12, 2011
1,869
1,314
Ireland
Samsung still making the processors for their biggest consumer rival, the likes of which they mock commercially.

Makes it easy to believe in an oligarchical world where competition is an illusion :O

Be very afraid.
 
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AlecZ

macrumors 65816
Sep 11, 2014
1,173
122
Berkeley, CA
The problem is that R&D is a fixed cost (doesn't cost any more R&D to produce an extra iPhone). The more iPhones are sold, the bigger the profit margins are if you're counting R&D. And counting all the other fixed costs like extra factory capacity that was also partially used for the iPhone 5S can be tricky, right?

Edit: R&D also probably does not cost very much compared to the component costs.
 
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Blue Fox

macrumors 6502a
Apr 13, 2009
509
52
Another thing to think about as well is that even though there are higher profit margins on the 64 and 128GB models, having higher profit margins on those allow the 16GB model to be priced where it is. In order to have an entry level cheaper phone, they must be able to have higher profit margins on the higher end phones so it all balances out. Business 101 type stuff, but most people don't think about this before commenting.....
 
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isoft7

macrumors 6502a
Oct 3, 2011
846
191
Don't put too much stock in the "RD" argument.

Remember, when they make these calculations, they're evaluating cost of individual components.

The cost of those parts are what they are to recover R&D expenses.

Thus, the only aspect of the iPhone evaluation that isn't being correctly assumed is ergonomics, advertising and software. As none of those things can be quantified.

That said, over the sale of all phones, given that much of what is now was taken from research prior, I wouldn't imagine the cost to produce being more than an additional $15 or so.

Bottom line, Apple could sell these devices for a LOT less. But they know their customer base well... they'll buy and pay for just about anything with the Apple logo on it. (that's blunt truth folks)
 
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nagromme

macrumors G5
May 2, 2002
12,546
1,196
Yes, because a "ziploc bag of parts" (some manufactured by means ONLY Apple has) is Apple's full cost.

There is no cost to transport those parts. No cost to assemble them. No cost to provide support for them. No cost to market and package them. No cost to transport and store them around the world. No R&D cost to develop the device in the first place. No cost to develop the OS or the apps. No cost for bandwidth. No cost for the cloud services behind it all. No insurance, no taxes, no patent fees. JUST a bag of parts.

...The cost of those parts are what they are to recover R&D expenses.

Thus, the only aspect of the iPhone evaluation that isn't being correctly assumed is ergonomics, advertising and software. As none of those things can be quantified. ...

"Correctly assumed" is wrong: iSuppli does NOT know Apple's R&D details. They don't know much--they guess as best they can at certain elements, because it's free publicity for them.
 
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AppleScruff1

macrumors G4
Feb 10, 2011
10,026
2,948
At least this article addresses the fact that it doesn't cost $200 to make an iPhone 6 - millions went into R&D and testing and such.

How many millions is key. If it was $150 million, that would add a dollar to the cost of the iPhone since they will sell somewhere around 150 million a year. If it is $1.5 billion, it would add $10 per phone.
 
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isoft7

macrumors 6502a
Oct 3, 2011
846
191
Samsung still making the processors for their biggest consumer rival, the likes of which they mock commercially.

Makes it easy to believe in an oligarchical world where competition is an illusion :O

Be very afraid.

:D

Remember, all of these large corporations care for one thing and one thing only... money.

The rest is an illusion perpetuated by their own exclusive fan base.

Apple fans are convinced that Jobs and now Cook really care about them as people. And through that, want to provide their customers a personalized welcoming experience. The reality is, that's all imaginary. All they want is to turn huge profits, make their stock holders happy and keep their jobs for as long as possible.

*REALITY
 
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AlecZ

macrumors 65816
Sep 11, 2014
1,173
122
Berkeley, CA
Bottom line, Apple could sell these devices for a LOT less. But they know their customer base well... they'll buy and pay for just about anything with the Apple logo on it. (that's blunt truth folks)

They sell iPhones at a huge profit because that's what they're worth to the market. And if you think they're worth that much mostly because of the Apple logo, you're more wrong than you're right.
 
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iSRS

macrumors 6502
Mar 2, 2010
436
201
Yet I paid $800 (including tax) for the iPhone 6 Plus 16GB. Only Apple can get away with this.

Yes, because the raw parts are the only aspect of the cost. Heck, even this article, unlike most of these types of articles, says more goes into the cost, yet you still felt compelled to comment "only Apple can get away with this"?? Ugh.

And only $16 more for more glass, more aluminum, bigger battery, and OIS? Right.
 
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