Apple iPad Costs $260 to Manufacture – Teardown Analysis

Apple iPad 16GB Without 3G Manufacturing Cost is $260

by Anton Shilov
04/08/2010 | 01:19 PM

Even though Apple sells its iPad for the starting price of $499, the actual manufacturing cost of the device is around $260, a teardown analysis by iSuppli market research firm has revealed. It appears that Apple makes a vast amount of money both on the device itself as well as content and supporting services that it will eventually sell to the iPad owners.

Display – The Most Expensive Component of iPad

 

“While the iPad has the potential to change the game in the computing, wireless and consumer worlds, it already has changed the game of how many electronic products are – and will be – designed,” said Andrew Rassweiler, director and principal analyst and teardown services manager for iSuppli.

Based on its physical teardown, iSuppli estimates the BOM of the low-end 16GB, non-3G iPad at $250.60. When manufacturing expenses are added, the cost rises to $259.60.

The single most expensive component in the iPad is the display, priced at $65 and representing 25.9% of the product’s bill of materials (BOM). The display is a 9.7” diagonal, 262K-color IPS TFT-LCD with a resolution of 1024x768 pixels.

The next most expensive component is the touch screen assembly at a cost of $30, or 12 percent of the BOM. The touch screen assembly is 9.7-inches in the diagonal dimension and uses capacitive technology. The supplier of the assembly is Wintek.

Coming in at third in terms of expense is the NAND-type flash memory, at a cost of $29.50 for the low-end 16GB iPad. The NAND in the iPad dissected by iSuppli was supplied by Samsung Electronics, but Apple likely also is employing other sources of these commodity parts.

The fourth most expensive component is the battery, at $21, representing 8.4% of the total BOM. The 3.7V battery is a lithium polymer battery pack that employs value-added modular design that combines two cells into a single pack that is more easily replaceable than two individual cells wired in. In the iPad torn down by iSuppli, the battery cells were supplied by Amperex Technology and the pack provided by Dynapack. We had not expected to see the battery cells kitted as a pack, so such a design element clearly suggests these batteries are meant to be replaced at some point.

Apple iPad – The New Paradigm for Building Mobile Devices

With more than 40% of its BOM dedicated to the display, touch-screen and other user interface components, Apple’s iPad represents a radical departure in electronic design compared to conventional products, according to a teardown conducted by iSuppli.

The combined costs of user-interface-related components in the iPad amounts to $109.50, representing 43.7% of total BOM of the 16GB, non-3G version of the iPad torn down by iSuppli.

“The iPad’s design represents a new paradigm in terms of electronics cost structure and electronic content. Conventional notebook PCs are ‘motherboard-centric,’ with all the other functions in the system –such as the display, the keyboard and audio – peripheral to the central microprocessor and the main printed-circuit board (PCB) at the core. With the iPad, this is reversed. Everything is human-machine-interface-centric, with the PCB and integrated circuits (ICs) all there to facilitate the display of content as well as user inputs,” said Mr. Rassweiler.

But Apple’s approach to invest maximum into design, display, touch-screen and other user interface components has a lot of shortcomings. Although the manufacturing cost of the 16GB device is nearly two times lower compared to its actual selling price, the company decided to save on other components, which resulted in massive amount of drawbacks: