We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
80,258 News Articles

iPhone 4 costs just £115 to produce

Analysts calculate price of iPhone 4 parts

Apple's iPhone 4 costs the company just $171 (£115) to build giving the new device a profit margin of more than 61%, according to the Wall Street Journal.

Materials and parts for the 16GB iPhone 4 total $171, said Brian Marshall of US analyst BroadPoint AmTech, while non-hardware costs such as licensing fees and set-asides for warranty claims add another $35, bringing Apple's total cost to $208. The 32GB iPhone 4, meanwhile, has a cost of materials price tag of $195, and a total cost including non-hardware fees of $230.

"The 16GB iPhone 3GS had a BOM [bill of materials] of $185 last summer, so the cost came down a little," said Marshall. "Apple is being very aggressive on its suppliers to lower BOM."

Assuming Apple receives $529 for each 16GB iPhone 4 and $629 for each 32GB model - based on the price in the US, which includes the subsidies that mobile carriers pay Apple - the lower-priced iPhone 4 boasts a gross margin of 61% while the 32GB device sports a gross margin of 70%.

Apple sells the 16GB iPhone 4 for $199, and the 32GB model for $299. It does not, however, disclose payments it gets from US operator AT&T or other carriers, leaving analysts like Marshall to guess at the total dollar amount it receives for each iPhone.

"The margins will actually uptick once the iPhone 4 ramps to volume production," Marshall said.

Marshall's analysis includes components and the direct non-hardware costs, but doesn't take into account research and development, marketing or labor costs. His estimate does include manufacturing and packaging costs, however.

The single most-expensive part of the iPhone 4 is the revamped display, which Marshall estimated at $25, one dollar more than the estimated $24 Apple pays Samsung, Toshiba and others for 16GB of flash memory. LG Display is the most likely supplier of the screen, which for the first time is a sealed unit that includes not only the display but also the touchscreen component.

The 32GB of memory in the more spacious iPhone 4 sets Apple back $48.

Apple CEO Steve Jobs touted the iPhone 4's screen - dubbing it the Retina Display - when he unveiled the new model three weeks ago. According to Apple, the iPhone 4's 3-inch-by-4-inch display packs four times the number of pixels as the iPhone 3GS's screen.

According to Marshall, the A4 application processor, a system-on-a-chip designed by Apple but made by Samsung, costs approximately $10, while the camera module - which powers both the 5-megapixel camera on the back and new 1.3-megapixel front-facing camera - also costs $10.

iSuppli estimated the A4's cost at a slightly-higher $10.75.

Apple has trimmed its iPhone costs by 29% since it introduced the smartphone in 2007. That year, iSuppli estimated the BOM of the 8GB first-generation iPhone at $263.83, giving Apple a profit margin of nearly 56%.

Marshall said he expects that the more expensive 32GB iPhone 4 will account for 70% of Apple's unit sales of the new model.

See also:

iPhone 4 review

Apple iPhone news

IDG UK Sites

Best camera phone of 2015: iPhone 6 Plus vs LG G4 vs Galaxy S6 vs One M9 vs Nexus 6

IDG UK Sites

In defence of BlackBerrys

IDG UK Sites

Why we should reserve judgement on Apple ditching Helvetica in OS X/iOS for the Apple Watch's San...

IDG UK Sites

Retina 3.3GHz iMac 27in preview: Apple cuts £400 of price of Retina iMac with new model