Big profits for Apple iPhone – iSuppli

Posted by Humphrey Cheung

El Segundo (CA) – Analysts at iSuppli, a market research firm, have ripped apart Apple’s iPhone and discovered that Apple is probably making more than 50 percent on each phone.  According to Andrew Rassweiler, principal analyst for iSuppli, the $599 retail-priced 8GB phone has a component cost of $265.83.  Component makers like Infineon and Samsung are also raking in the bucks as the iPhones fly off the store shelves.

According to some market analysts, the weekend sales of the iPhone were between 500,000 and 700,000 units.  iSuppli wireless communication analyst Tina Teng adds that the iPhone should sell around 4.5 million units this year and 30 million phones by 2011.

iSuppli estimated the component costs by performing a physical teardown, which is a fancy term for ripping apart the phone and cataloging the parts.  The $265.83 figure is less than a dollar off from the firm’s estimate back in January – which is very impressive considering no physical unit was available back then.

Each iPhone has approximately $15.25 worth of Infineon wireless and power management chips, the figure is about 6.1% of the total cost of the 8GB iPhone.  Samsung processors, SDRAM and NAND Flash memory make up the largest portion of the component costs at 30.5%.  Both the 4GB and 8GB iPhone use Samsung’s ARM RISC processor for $14.25.  Each also has 1 Gbit of Samsung DDR SDRAM at $14.00.  The 4GB iPhone uses $24 worth of Samsung NAND flash, while the 8GB uses $48.

The cost estimates done by iSuppli are just for the components and do not include royalty and logistics costs. Previous iSuppli teardowns of Apple's iPod and other gadgets have shown similar profit margins.