New iPad Costs More To Make Than iPad 2: Apple Absorbs Cost
Like the iFixit story we reported on earlier, market research company IHS iSuppli has also taken a new iPad to pieces, ensuring that it never works again, but unlike the iFixit eye candy advertorial, IHS iSuppli has provided rather more useful information. They have listed all the significant parts that go into making the device and have produced a Bill of Materials from this to try and work out how much it cost Apple to make.
It turns out that the model they took apart, the 32GB with 4G one cost 9% more than a similar iPad 2 to make. What’s interesting about this though, is that the cost hasn’t been passed on to Apple fans. Presumably, this is due to competitive pressure from tablets made by other manufacturers.
The IHS iSuppli press release says that the new iPad cost Apple $364.35 for the parts, plus about $11 for assembly, totalling $375.10. This is a shade under half the retail price of $729.00. It appears that the component manufacturer to make the most money from Apple is Samsung, since IHS believes that Samsung sells the Retina display to Apple for $87, which is a lot more than the $57 for iPad 2 screens. Note however, that the new screen has four times the resolution, so it’s not such a bad deal. Somewhat unsurprisingly, the biggest cost items in the new iPad are the Retina display and the larger battery. Click the link below for a more detailed breakdown of costs and a handy table listing the Bill of Materials.
Please note that these teardown assessments are preliminary in nature, account only for hardware and manufacturing costs and do not include additional expenses such as software, licensing, royalties or other expenditures.
“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,” Rassweiler noted. “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.”
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