iPhone 7 Component Costs Estimated to Start at $220

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Sep 20, 2016.

  1. MacRumors macrumors bot


    Apr 12, 2001

    iPhone 7 component costs are estimated to start at $219.80, which is $36.89 higher than iPhone 6s, according to a preliminary teardown [Excel] of a 32GB model by IHS Markit.

    The display remains the most expensive component, costing an estimated $43, followed by an Intel modem and other baseband chips worth an estimated total of $33.90.

    Apple's quad-core A10 Fusion chip is the third most expensive item on the bill of materials, costing an estimated $26.90. Meanwhile, the larger 1,920 mAh battery is said to cost just $2.50.

    The larger rear-facing iSight camera and improved 7-megapixel front-facing FaceTime camera cost a combined $19.90, according to IHS Markit. Electromechanical components, including the Taptic Engine, antennas, connectors, microphones, and stereo speakers, cost an estimated $16.70 combined.

    iPhone 7's 2GB of RAM supplied by Samsung, and 32GB of flash storage supplied by SK Hynix, are estimated to cost a combined $16.40. An audio codec and audio amplifier supplied by Cirrus Logic, an NFC controller supplied by NXP, a Bosch Sensortec-made barometer, along with an accelerometer, gyroscope, Touch ID, proximity sensor, and other sensors, cost an estimated $14 altogether.

    The accessories included in the iPhone 7 box, including a Lightning-to-USB cable, Lightning-to-3.5mm audio adapter, EarPods with a Lightning connector, and 5W USB power adapter cost an estimated $11.80 combined.

    IHS raises Apple's total cost to manufacture the iPhone 7 to $224.80 after adding $5 in "basic manufacturing costs" related to assembly, insertion, and testing. A 32GB iPhone 7 Plus costs $649 as a point of comparison.

    However, the bill of materials does not factor in costs related to, among other things, research and development, software, licensing costs, and transportation. The accuracy of the component costs is also questionable. Last year, Apple CEO Tim Cook said he has never seen a cost breakdown that is "anywhere close to being accurate," adding that they are generally "much different than the reality."

    At least in comparison to IHS estimates for previous iPhones, the iPhone 7's bill of materials is seemingly costlier than the iPhone 6, iPhone 5s, and iPhone 5, each estimated to start at $200, and the iPhone SE at $160.

    Article Link: iPhone 7 Component Costs Estimated to Start at $220
  2. magicschoolbus macrumors 65816


    May 27, 2014
    removing the headphone jack must of saved a lot of $ per unit. so courageous of them, saving all of that money.
  3. Gasu E. macrumors 601

    Gasu E.

    Mar 20, 2004
    Not far from Boston, MA.
  4. bladerunner2000 macrumors 68020


    Jun 12, 2015
    Adding a headphone jack would have cost them 1 dollar extra.
  5. pnoyblazed macrumors 6502a


    Mar 1, 2008
    I wonder what the cost will be for next year's iPhone
  6. ILuvEggplant Suspended


    Jul 28, 2016
    Los Angeles, CA
    Well $1000 for an iPhone seems even more reasonable
  7. Small White Car macrumors G4

    Small White Car

    Aug 29, 2006
    Washington DC
    I know people moan about how these prices aren't accurate don't reflect other costs, but I find the year-to-year comparisons to be quite informative.

    It doesn't matter what the actual numbers are, it still shows that Apple is striving to squeeze more into these phones than ever before at the expense of their margins.

    And that's interesting info.
  8. garirry, Sep 20, 2016
    Last edited: Sep 21, 2016

    garirry macrumors 68000


    Apr 27, 2013
    Canada is my city
    You'd think that with half a trillion dollars, they might use a little more of their own money for research and stuff and make the iPhone cost closer to its production cost.

    EDIT: You do all realise I'm joking right?
  9. vertical smile macrumors 68040

    vertical smile

    Sep 23, 2014
    I don't think it would have cost even that much, but I am no expert in the field.
  10. now i see it macrumors 68030

    Jan 2, 2002
  11. LordVic macrumors 603

    Sep 7, 2011

    now that that's out of the system:

    we're about to get inundated wiht hundreds of post who somehow think that this in any ways is reflective of the price we pay and that we're all being "ripped off"

    you cannot ever equate raw hardware costs with retail pricing. Hardware costs are only a portion of the total costs that go into each device.

    the fact that the iPhone 7 actually comes with industry standard hardware finally (2gb ram, and the 32gb base storage) and is clearly costing Apple more to produce from a hardware standpoint, it's clear that Apple is lowering margins on iPhone sales, which is kind of the opposite of "greedy"
  12. okboy macrumors regular

    Oct 9, 2010
    I don't know why they go through the trouble of making these breakdowns. We know from financial reports that Apple's profit margin is around 30%, depending on the device.
  13. gsmornot macrumors 68030


    Sep 29, 2014
    The material for a nice table might run about $500 but once you add the labor to build and finish you could be looking at a $1500 table more or less. Just for example.
  14. frifra macrumors 6502a


    Nov 29, 2008
    Someone please look up how much the headphone jack in the 6s did cost and calculate what Apple saved :D.
    --- Post Merged, Sep 20, 2016 ---
    Except that table is made in China. Just for example.
  15. ftaok macrumors 603


    Jan 23, 2002
    East Coast
    These cost breakdowns are always so irrelevant. They don't tell much of a story at all.

    So all of those parts that Apple buys, like the Intel modem for $33.90, doesn't cost Intel that much to make. So let's pull a number of of the air and say that it costs Intel $13.24 for the modem. Then whoever is supplying the stuff that Intel has to buy to make the modem isn't selling at cost either.

    Eventually, it's all free since the air, water, sand, etc to make all of the stuff is available at your local beach. Apple so greedy!

    I cringe every September when this post comes out to imply that the iPhone costs $200 to make.
  16. polterbyte macrumors 6502


    Sep 24, 2012
    Yeah, but how many hundreds of thousands of US$160 (AirPod) sales would they have foregone, on top of those dollars?
  17. seventhedition macrumors member

    Jun 23, 2010
    New Orleans, LA
    [QUOTE="MacRumors, post: 23534972,
    A 32GB iPhone 7 Plus costs $649 as a point of comparison. [/QUOTE]

    The 7 Plus starts at $769 and the 7 starts at $649. ​
  18. Ubele macrumors 6502a

    Mar 20, 2008
    Before the inevitable flood starts ...

    Greedy Apple! Their markups are obscene!! A 10% profit should be enough for anyone, so the iPhone 7 shouldn't cost more than $250!!! I am so done with Apple!!!! I'm jumping ship for Android!!!!!

    You obviously know nothing about business. You're not just paying for parts -- you're also paying for R&D, marketing, production, distribution, etc. Enjoy your $250 Android phone (assuming you can find one). <rolls eyes>
  19. Schwyz macrumors regular


    Apr 6, 2016
    Up a tree
  20. frifra macrumors 6502a


    Nov 29, 2008
    Ohh, so does this mean the costs really reflect the cost of a "single" iphone, meaning no discounts applied for buying thousands of chips etc.?
  21. danakin macrumors regular


    Dec 6, 2012
    Before people lose their spit over how much profit the Cupertonians rake in per device, stop to consider costs for:
    • Research and Development
    • Marketing
    • Shipping
    • Taxes
    • Legal
    • Regulatory compliance
    • Facilities (leases and sundry expenses)
    • Salaries and benefits
    • Warehousing
    • Product testing
    • Event planning and management
    • Internal and Retail training
    I'm sure there are others but those are at the top of my head.
    Also if customers and/or suckers (depends on your perspective) choose to dole what what they're asking for, then keep charging what the market will bear. Capitalism folks!
  22. wovel macrumors 68000

    Mar 15, 2010
    You think software, etc is free?
  23. 2457282 Suspended

    Dec 6, 2012
    The cost estimates does not include OS or Software.
    It does not include marketing and other expenses.
    It does not include taxes, tariffs, shipping.
    It does not include profit and investor return.
    It does not include R&D.

    When you do, I believe that Apple states gross margins around 40% putting the per phone closer to $400.
  24. ParanoidDroid macrumors 6502


    Sep 15, 2013
    Venusville, Mars
    Wait, wait! The battery costs just est. $2.50??? Omg, such a cheap part can ruin an entire phone line, e.g. Samsung Galaxy Note 7? Wow, just wow!
  25. iosuser macrumors 6502a

    Mar 12, 2012
    Did people really expect Mr. Cook to say that these estimates are close to reality?

    Apple just printed another $430 x2 in the time I took to type that.

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