Apple's iPhone 5 packs some of the latest features, high quality materials and advanced components in the smartphone market into its slim frame, bringing the bill of materials (BOM) for the low-end version, the 16GB model, to $199, according to a virtual teardown of the handset by the IHS iSuppli Teardown Analysis Service. The addition of 4G Long-Term Evolution (LTE) capability, a new processor and a larger screen contributed to the higher production cost, the report concluded.
An $8 manufacturing cost pushes the total price to $207, while the BOM for the 32GB version is $209 and for the 64GB version is $230, according to the report, which is based on an analysis of the specifications announced by Apple, combined with information regarding known components and suppliers. Apple's touch-sensitive display is the costliest component of the handset, costing Apple $44, a bump up from the $37 cost for the iPhone 4S. The report said the added cost was due to the larger 4-inch screen on the iPhone 5, as well as the inclusion of the new in-cell touch-screen technology.
"The iPhone 5's components are expected to be slightly more expensive compared to the iPhone 4S model," Andrew Rassweiler, senior principal analyst of teardown services for IHS said in a prepared statement. "The low-end iPhone 4S with the same memory density as the base-model iPhone 5 carried a BOM of $188, according to a preliminary estimate issued by IHS in October 2011. 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."
Another major upgrade of the iPhone 5 is the use of Apple's A6 processor, which has a dual-core processor as well as several graphics processing units to boost performance and replaces the A5 processor found in the iPhone 4S. The report estimated the A6 to be slightly more expensive, at $17.50, compared to $15 for the A5, based on pricing at the time of the iPhone 4S introduction. The addition of high-speed 4G LTE technology, one of the most anticipated features on the iPhone 5, is estimated to have driven up the cost of the wireless section to $34, compared to about $24 for the iPhone 4S.
"The iPhone 5 makes a big evolutionary step in technology that we have not seen elsewhere with the use of in-cell touch sensing," Rassweiler continued. "Most other smartphone LCDs use a completely distinct capacitive touch-screen assembly that is physically separate and placed on top of the display. 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 a display that senses touch without the need for a separate capacitive touch layer."