The new Apple iPad reveals something about what Apple is willing to do to stay on top of the tablet food chain: spend more. That desire roughly translates into $85 more per unit.
While Apple starts the pricing of its third-generation iPads at $499, exactly where it did with iPad 2, the new tablets are far more expensive for it to make. One could argue that Apple, sitting atop a gargantuan mountain of cash, is willing to take a small hit to profits. Or, and perhaps more likely, it's taking the calculated risk that a better iPad at the old iPad pricein a market already filled with tens of millions of iPadswill mean more iPad sales. And more cash.
The third-generation 16GB iPad with WiFi carries a bill of materials (BOM) of $306, according to IHS iSuppli, which performed a teardown of the new tablet. Add in 4G and the BOM rises to $348. Add in manufacturing costs, and it's up to $358. That doesn't include software, licensing or royalty costs.
The 32GB 4G model, with manufacturing, costs Apple $375 a tablet; the 64GB model, a total of $409.
The 16GB WiFi-only iPad 2, by contrast, carried a BOM of $237; add 3G and it was up to $263. Throw in manufacturing, and Apple's total bill climbed to $271.
Who is on the receiving end of these payments? More than any other manufacturer, it's Samsung. The South Korean company is the recipient of about 30.2 percent of the BOM from the 32GB, LTE iPad. Samsung also supplies Apple with display technology and the applications processor.
Of course, Samsung produces its own tablet linethe Galaxy Tabwhich competes with the iPad.
Samsung may have also supplied the NAND flashat a cost of $33.60 to the 32GB Long-Term Evolution (LTE) iPad or $67.20 to the highest-end modelthough in the particular iPad that IHS took apart, the NAND was from Toshiba.
In addition to Samsung, "Toshiba, Hynix Semiconductor and others are all NAND suppliers to Apple, and each will claim a portion of those revenues," IHS reports. In instances where Samsung is indeed the supplier, however, its share rises to 39.4 percent, or $33.60 of the total $143.60 for the 32GB LTE iPad.
Also possible, says IHS, is that Samsung provides the new iPad's $32 battery cells, which would drive its portion of the BOM to nearly 50 percent.
That Samsung display is not-so-arguably the Apple iPad's best feature. (Walt Mossberg, writing for The Wall Street Journal, called it "the most spectacular display I have ever seen in a mobile device.")
But it's also the most expensive display. At $87, Apple pays $30 more for it than it did for the displays on its second-generation tablets.