Apple's new iPad models are more expensive to produce
than the iPad 2 at time of launch, according to market
research firm IHS iSuppli.
The new iPad, equipped with 32 Gigabytes (GB) of NAND
flash memory and 4G Long Term Evolution (LTE) wireless
capability, carries a bill of materials (BOM) of $364.35,
according to the research firm. When the $10.75
manufacturing costs are added in, the cost to produce the
new iPad rises to $375.10. The BOM of the 16GB 4G LTE
version amounts to $347.55, and the 64GB version is
estimated at $397.95.
The $364.35 BOM represents 50 percent of the $729.00
retail price of the 32GB LTE version of the new iPad.
The very lowest-end version of the new iPad, with 16GB
memory and no LTE, carries a combined BOM and
manufacturing cost of $316. The highest-end model, with
64GB memory and integrated LTE, has a total BOM and
manufacturing expense of $408.70, iSuppli added.
iSuppli aknowledged that those teardown assessments were
preliminary in nature, account only for hardware and
manufacturing costs and did not include additional
expenses such as software, licensing, royalties or other
expenditures.
The new iPad is more expensive to produce than the iPad 2
at the time of product launch, even though the retail
price points are the same. The 32GB LTE model's BOM is
nearly 9 percent higher than an iPad 2 equipped with 32GB
and 3G wireless, which carried a cost of approximately
$335 at the time of product launch. Major factors driving
up the BOM include the addition of the high-resolution
Retina display, LTE wireless and a larger-capacity
battery.
The table below summarizes the major components in the
new iPad.
Among all component suppliers, Samsung Electronics
continues its reign as the big winner in the individual
iPad analyzed by the IHS iSuppli Teardown Analysis
Service. The report says that Samsung supplied both the
display and the applications processor. The new iPad's
Retina display represents the most expensive single
component in the tablet, at $87, while the applications
processor costs an estimated $23. Combined, this gives
Samsung a 30.2 percent share of the 32GB LTE version of
the new iPad?s bill of materials, the largest for any
supplier.
In the individual new iPad analyzed, the NAND flash was
supplied by Toshiba. However, Samsung also is a source of
NAND for the new iPad. In a 32GB LTE iPad where Samsung
is also the supplier of the NAND, Samsung's share of the
BOM rises by $33.60 to a total of $143.60, amounting to
39.4 percent of the total BOM. However, Toshiba, Hynix
Semiconductor and others also are all NAND suppliers to
Apple, and each will claim a portion of those revenues.
IHS believes that the battery cells are supplied by
Samsung. If this turns out to be the case, Samsung will
account for nearly 50 percent of the new iPad's BOM.
The new iPad's Retina display has a resolution of 2,048
by 1,536 pixels. It costs $87, compared to $57 for the
screen used in the iPad 2. The $87 cost accounts for 24
percent of the BOM of the new iPad with 32GB NAND and
LTE, making the Retina display the most expensive single
component in the tablet.
IHS believes Apple likely has qualified three sources for
the display in the new iPad: Samsung, LG Display and
Sharp. However, the firm says that all the volume
shipments of the new iPad display are currently coming
from Samsung.
The touch screen for the new iPad costs an estimated $40,
or 10.9 percent of the total BOM. As in the iPad 2, the
main suppliers in this area are still TPK, Wintek and Chi
Mei.
The wireless section costs $41.50 and accounts for 11.4
percent of the BOM. Because this section provides support
for the LTE capabilities of the new iPad, it is
significantly more expensive than the $25.60 wireless
section of the iPad 2, which supported the 3G air
standard. The big winner in this section is Qulcomm Inc.,
whose MDM9600 baseband processor provides the core LTE
functionaility. IHS believes that the wireless section is
the same for both AT&T and Verizon versions of the new
iPad, although that hasn't been confirmed yet.
The A5X applications processor costs $23, and represents
6.3 percent of the total BOM. Samsung manufactures the
A5X for Apple. However, for this device, Samsung serves
as a foundry partner to Apple, and not as an independent
semiconductor supplier. Apple is the designer and owner
of the intellectual property of the A5X, and Samsung
manufactures the part on a contract basis. This means
that Samsung likely commands a lower margin on the device
that it would otherwise.
"The NAND flash memory is one of the key
profit-generating components for Apple in the new iPad
line, as it has been in previous iPads and in the iPhone
family," noted Andrew Rassweiler, senior principal
analyst, teardown services, at IHS. "Apple makes far and
away more money in selling consumers NAND flash than NAND
flash manufacturers make selling it to Apple. And the
more flash in the iPad, the higher the profit margin
there is for Apple."
The new iPad camera module design and cost is the same as
in the iPhone 4 camera module. The two camera modules
cost a combined $12.35, representing 3.4 percent of the
BOM.
The battery delivers a major upgrade from the previous
model. The lithium polymer battery in the new iPad
supports 42.5 watt hours, up about 75 percent from 25
watt hours in the iPad 2. However, because of price
decreases during the past year, the new battery costs
only 40 percent more than the old one, at $32.00,
compared to $22.75 for the one in the iPad 2.