iPhone 5 'costs Apple $207'

Posted by Emma Woollacott

The iPhone 5 is costing Apple more to build than any model since the very first - but still hundreds of dollars less than the retail price.

According to market research firm IHS iSuppli, the bill of materials (BOM) for the basic model comes to $199, plus an $8 manufacturing cost. For the 32GB version, the BOM rises to $209.00, and the 64GB version is comes in at $230.00.

While the first-ever iPhone came in at rather more, with the 4GB version carrying a BOM of $246, manufacturing costs fell thereafter. The low-end iPhone 4S with the same memory density as the base-model iPhone 5, carried a BOM of $188.00.

"With the base model carrying a $199.00 BOM, the iPhone 5’s components are expected to be slightly more expensive compared to the iPhone 4S model," says Andrew Rassweiler, senior principal analyst, teardown services, for IHS.

"While the price of some components, such as NAND flash, has fallen during the past year, the iPhone 5’s overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S."

As with previous models, the most expensive bit is the display. At $44.00, says iSuppli, this makes it pricier than the combined total of  $37.00 for the iPhone 4S display with separate touchscreen. The reason is the iPhone 5’s larger display, as well as the new in-cell touchscreen technology.

"The iPhone 5 makes a big evolutionary step in technology that we have not seen elsewhere with the use of in-cell touch sensing. Most other smartphones LCDs use a completely distinct capacitive touchscreen assembly that is physically separate and placed on top of the display, says Rassweiler.

"The iPhone 5 partially integrates the touch layers into the display glass, making the product thinner and reducing the number of parts required to build display that senses touch without the need for a separate capacitive touch layer."

Another reason for the higher cost is the inclusion of 4G LTE technology. This is estimated to have driven up the cost of the wireless section of the iPhone 5 to $34.00, compared to about $24.00 for the iPhone 4S.

Similarly, the iPhone 5's A6 processor is dearer than the A4, at $17.50, rather than $15.00.

The 16GB of NAND flash in the iPhone 5, though, is just $10.40, down dramatically from $19.20.

"NAND flash continues to come down in price as manufacturing processes for these memory chips become more advanced," says Rassweiler. "And because it is the world's largest buyer of NAND flash, Apple gets preferential pricing. Apple’s massive leverage in this market is reflected in our price estimate."

The breakdown, though, doesn’t cover software, royalties or licensing. Nor does it include advertising for the new device - quite pricey, one suspects.