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The iPhone 5 Costs Apple More Than iPhone 4S at Launch[09/19/2012 06:12 PM]
While the new Apple iPhone 5 features a number of brand-new parts, preliminary analysis conducted by IHS iSuppli suggests that the smartphone costs Apple from $207 to $238 to manufacture. Although the information is preliminary it is based on some educational guesses and will hardly change significantly when actual device is analyzed.
The new iPhone 5 carries a bill of materials (BOM) of $199 for the low-end model with 16GB of NAND flash memory, according to a preliminary virtual teardown conducted by IHS iSuppli. When the $8 manufacturing cost is added in, the cost to produce the iPhone 5 rises to $207. For the 32GB version of the iPhone 5, the BOM cost increases to $209, while 64GB version is estimated at $230. These teardown assessments are preliminary in nature, account only for hardware and manufacturing costs and do not include other expenses such as software, licensing, royalties or other expenditures.
“With the base model carrying a $199 BOM, the iPhone 5’s components are expected to be slightly more expensive compared to the iPhone 4S model [back in 2011]. The low-end iPhone 4S with the same memory density as the base-model iPhone 5 carried a BOM of $188. While the price of some components, such as NAND flash, has fallen during the past year, the iPhone 5’s overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S,” said Andrew Rassweiler, senior principal analyst of teardown services at IHS.
The 16GB of NAND flash in the iPhone 5 is estimated to cost $10.40, down dramatically from $19.20, based on pricing in October 2011. Still, the 64GB module costs only $41.60, but drives cost up by $200.
As in previous models, the costliest subsystem in the iPhone 5 is estimated to be the display with integrated, in-cell touch sensing. At $44, this subsystem is pricier than the combined total of $37 for the iPhone 4S display with separate touchscreen based on pricing from October 2011. This is due to the iPhone 5’s larger 4" screen and the inclusion of the new in-cell touchscreen technology.
“The iPhone 5 makes a big evolutionary step in technology that we have not seen elsewhere with the use of in-cell touch sensing. Most other smartphones LCDs use a completely distinct capacitive touchscreen assembly that is physically separate and placed on top of the display. The iPhone 5 partially integrates the touch layers into the display glass, making the product thinner and reducing the number of parts required to build display that senses touch without the need for a separate capacitive touch layer,” explained Mr. Rassweiler.
In the past, smartphones with capacitive touch technology employed different suppliers for the display and touchscreen. However, Samsung made the first advance beyond conventional capacitive touch with what is known as on-cell touch. All of Samsung’s Super AMOLED screens employed in smartphones use on-cell technology, which is sold as a single integrated display/touchscreen unit from Samsung.
Apple’s in-cell technology represents the next step beyond on-cell by integrating the touch sensing feature into the display. No separate touchscreen assembly is involved; instead, a single unit comes directly from the iPhone 5’s three known display suppliers - LG Display, Japan Display and Sharp Corp.
4G/LTE technology operates at different frequencies around the world, which makes smartphones sold on certain markets incompatible with networks on the other markets. Most smartphone manufacturers build different variations of their smartphones for each market or even carrier. However, Apple wanted to make things differently and sell less variations of its handset around the world.
“We believe that Apple is implementing 4G/LTE in a particularly novel way. Apple [packs] all of the features needed to support as many 4G/LTE carriers as possible with a single product. 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," the analyst explained.
The addition of high-speed 4G/LTE technology is estimated to have driven up the cost of the wireless section of the iPhone 5 to $34, compared to about $24 for the iPhone 4S.
The iPhone 5 is expected to use a similar 4G/LTE wireless subsystem found in the iPad 3, but with at least one major enhancement. The iPad 3’s wireless section is based on Qualcomm MDM9600 and its RTR8600 RF transceiver. However, in the iPhone 5, Apple is expected to employ Qualcomm’s second-generation MDM9615 baseband processor, which is made with a more advanced semiconductor manufacturing technology, reducing power consumption.
Another major upgrade of the iPhone 5 is the use of the A6 processor, compared to the A5 in the iPhone 4S. The A6 is estimated to be slightly more expensive, at $17.50, compared to $15 for the A5, based on pricing at the time of the iPhone 4S’s introduction.
According to preliminary information, the A6 has a dual-core ARM Cortex-A15 general-purpose processor as well as several PowerVR graphics-processing pipes. Samsung is expected to be the manufacturer of the A6. However, since this is an Apple-designed chip, Samsung is expected to produce it on a foundry basis, rather than acting as a semiconductor supplier for Apple. IHS speculates the A6 is manufactured using at least 32nm process geometry, and perhaps even the more advanced 28nm technology. This will be determined during the IHS iSuppli physical hardware teardown.
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