iPhone 5 Virtual Teardown Reveals Higher BOM
September 19, 2012

iSuppli Estimates The New iPhone 5 May Cost $207 To Build

Michael Harper for redOrbit.com - Your Universe Online

Much of this year´s pre-iPhone hype followed the familiar pattern laid out in years past. The most notable difference, of course, was that we knew nearly all there was to know about the phone going into the announcement. In years past, Apple preferred to shock and surprise us all with one grand unveiling.

While we knew more about this year´s iPhone, the rest of this year´s rumor cycle continued on as it had in years past. We heard both credible and non-credible rumors come down the pipeline, leaked photos began to show up from Asian suppliers and the New York Times and Wall Street Journal finally jumped in as they normally do, confirming small bits and pieces of news about the next iPhone. Yes, even case makers started producing third-party chunks of silicon and plastic to be one step ahead of Apple.

After launch, the iPhone 5 continued along it´s ritualistic path, sending shares of Apple climbing to new heights and setting new pre-order and, it can be assumed, opening weekend sales. Yes, everything is as it ever was.

So, in keeping with this grand iPhone tradition, market research company IHS iSuppli has conducted a “virtual teardown” of the iPhone 5 to come up with a best guess as to how much the iPhone costs to make and, subsequently, how large Apple´s take is from each sale.

According to this new report, the entry level iPhone 5 (16GB) has a $199 bill of materials (or BOM). After the cost of manufacturing the iPhone 5 is considered, ($8) iSuppli estimates the new, entry model phone costs Apple a total $207 to build.

As you might expect, the larger, 32GB costs slightly more, carrying a $207 BOM while the largest, 64GB has an estimated BOM of $230.

Of course, these numbers are all preliminary estimates, as only a handful of reviewers have actually spent any quality time with Apple´s latest slab of greatness.

Furthermore, iSuppli points out that these cost estimations do not include elements which they cannot predict, such as licensing, cost of software and royalties. Based on these BOM and manufacturing-only estimates, however, iSuppli suggests Apple may be spending more on this iPhone than they have in years past.

“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,” said Andrew Rassweiler, senior principal analyst for iSuppli, in their press release.

“The low-end iPhone 4S with the same memory density as the base-model iPhone 5 carried a BOM of $188.00, according to a preliminary estimate issued by IHS in October 2011.”

Another tradition may have appeared in these numbers, as iSuppli suggests Apple has, once again, spent more on the display than any other subsystem. This year, Apple spent $44 a piece for that new, in-cell screen which completely removes the top layer of glass, combining the LCD and touch panels into one sheet of glass. Last year, Apple, spent $37 per phone on the old Retina screen with the extra pane of glass installed.

“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 said. This meddling of screens plays a large role in the trimming of the iPhone 5.

Elsewhere in the phone, Apple could be spending an estimated $34 per phone for LTE connectivity, according to iSuppli.

“We believe that Apple is implementing LTE in a particularly novel way,” Rassweiler said.

Rather than build specific handsets for specific carriers, (as is the Samsung way) Apple has chosen to do things slightly differently.

“Instead, the Apple way is to pack all of the features needed to support as many carriers as possible with a single product,” continues Rassweiler.  “Still, that will be tough to do in this situation. For now, IHS believes there are at least two different versions of the iPhone 5–each with multiband filters that will allow Apple to support as many global markets as possible with as few versions of the product as feasible. In some ways this is an expensive way to do business, but by maintaining the fewest numbers of variations possible, Apple is playing to its strength in product design.”

Of course, each of these numbers are nothing more than best guesses and estimates. iSuppli plans to firm up these costs whenever they can pry open one of these new phones themselves.