iPhone 5S Teardown Sheds Light On Actual Costs

Teardowns of the iPhone 5s done by iSuppli are shedding more light on how much the device actually costs the company to manufacture versus how it much it charges end users.

Taking into account the pricing associated with including each individual part, iSuppli says that its preliminary teardown found that the 16GB iPhone 5s costs around $198 in assembly costs and components. That’s slightly higher than the $197 that it cost Apple to manufacture the 16GB iPhone 5. That price goes up slightly for higher capacity versions of the iPhone 5s because of NAND flash storage costs.

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Though the costs of each component are interesting from an abstract point of view, it’s the total cost of manufacturing a device versus how much Apple sells the device for that potential buyers will find more interesting. If the 16GB iPhone 5s costs Apple $198 to build, Apple is selling the devices with a margin of 69%.

As Apple charges carriers and users looking to avoid service agreements $649 for a 16GB iPhone 5s, that works out to be around $448 of potential profit. The figure is more astonishing for higher capacity versions of the iPhone 5s. iSuppli says that the 32GB iPhone 5s has an implied margin of 72%, with the 64GB version of the iPhone 5s topping even it with an implied margin of 74%.

While the figure is certainly eye-popping, it’s certainly not unfamiliar territory for Apple, who remains one of the only consumer electronics companys that can consistently charge high premiums for smartphones and tablets. Unfortunately these figures could be slightly off depending on how much it costs Apple to develop new products. However, only Apple knows that exact figure, and it has no history of sharing that figure with anyone outside of the company.

As expected, the slight rise in build costs are directly attributed to the iPhone 5s’ more powerful components. The 1GB of DDR3 RAM inside the iPhone 5s costs $11, as compared to the $9 that the DDR2 RAM inside the iPhone 5 and the iPhone 5c cost. The device’s upgraded processor is also costing Apple a bit more; $19 as compared to the $13 the Apple A6 processor.

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Finally, the TouchID fingerprint reader is costing the company a bit more in components, too. It rings in at around $15, as opposed to the $8 the home button on the iPhone 5 and the iPhone 5c costs.

According to these estimates, the device’s Retina display is still the most expensive part included in the iPhone. The display and touch screen sensor in the iPhone 5s costs Apple $41.

The iPhone 5s available from AT&T, Verizon, Sprint and T-Mobile, beginning at $199 with a renewed two year contract.

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