iPhone 4 Carries Bill of Materials of $187.51, According to iSuppli

iPhone 4 Carries Bill of Materials of $187.51, According to iSuppli

PEl Segundo, Calif., June 28, 2010—The iPhone 4’s design may be radically different—but the strategy remains the same, with the latest member of the product line carrying a Bill of Materials (BOM) that should continue to generate high profit margins for Apple Inc., according to iSuppli Corp.’s Teardown Analysis service.

The 16Gbyte version of the iPhone 4 carries a BOM of $187.51, based on a preliminary cost estimate derived from a physical teardown of the product.

“Just as it did with the iPad, Apple has thrown away the electronics playbook with the iPhone 4, reaching new heights in terms of industrial design, electronics integration and user interface,” said Kevin Keller, principal analyst, teardown services, for iSuppli. “However, the BOM of the fourth-generation model closely aligns with those of previous iPhones. With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve—one whose size is exceeded only by Microsoft Corp.”

iSuppli estimated the BOM of the 3GS in 2009 at $170.80; the 3G in 2008 at $166.31 and the first iPhone in 2007 at $217.73.

The attached figure presents the results of iSuppli’s preliminary teardown estimate. Please note that the BOM accounts only for hardware costs and does not include other expenses such as manufacturing, software, marketing, distribution and royalties and licensing fees.

Housing complex

One of the most apparent examples of the iPhone 4’s design innovation is its completely redesigned housing. Unlike the unibody housing of previous models, the iPhone 4’s enclosure is composed of multiple pieces, allowing it to accommodate a considerably larger battery as well as the much-discussed integrated antenna.

“The metal housing of the outer enclosure serves as a physical antenna, a tough task to design and manufacture because antennae pieces have to be insulated from other parts, and yet be rigid around the perimeter,” Keller said. “This adds more complexity and cost, but elegantly uses every possible cubic millimeter of the iPhone for function, and not just form. The tight intertwining of form and function is an area where Apple has always excelled.”

Less is more in wireless

The wireless subsection of the iPhone 4 is far smaller than in previous members of the line because of greatly increased integration of the Radio Frequency (RF) functionality into the core chipset components, despite the presence of an additional air standard: High-Speed Uplink Packet Access (HSUPA), which allows the uploading of bandwidth-intensive HD video.

“Out of the nearly 300 cell phones torn down by iSuppli, the iPhone comes the closest to integrating the entire wireless interface—including all the supporting Radio Frequency (RF) modules—on a single chip,” Keller said. “This further enhances the iPhone 4’s space efficiency and serves as yet another testament to the advanced state of Apple’s design.”

Design winners

The LCD display represents the single most expensive component in the iPhone 4, costing $28.50 and accounting for 15.2 percent of the product’s total BOM. The 3.5-inch display uses advanced Low-Temperature Polysilicon (LTPS) and In-Plane Switching (IPS) technology, and features a 960 by 630 resolution—four times that of the iPhone 3GS.

While the display is not labeled, iSuppli believes the most likely supplier is LG Display. Toshiba Mobile Display (TMD) also could serve as a source for the part.

The next most expensive single component is the NAND-type flash memory. In the 16Gbyte version of the iPhone 4, the NAND costs $27 and accounts for 14.4 percent of the BOM. In the individual iPhone 4 torn down by iSuppli, the NAND flash was supplied by Samsung Electronics Co. Ltd., although Apple could be employing other sources as well.

Samsung also supplies the next costliest part, the 4Gbits of mobile Double Data Rate (DDR) SDRAM, priced at $13.80, or 7.4 percent of the BOM.

Following on the value ranking is the baseband Integrated Circuit (IC), at $11.72, or 6.3 percent of the BOM. Infineon Technologies AG is the supplier of this part, iSuppli’s teardown reveals.

Next on the component cost countdown is the A4 applications processor, manufactured by Samsung but using Apple’s Intellectual Property (IP). iSuppli estimates the cost of the A4 at $10.75, or 5.7 percent of the iPhone 4’s BOM.

Other parts and suppliers

Subsequent on the cost list is the capacitive touch screen with reinforced glass, at $10.00, or 5.3 percent of the BOM. While the supplier of the touch screen is not labeled and thus cannot be determined through a teardown analysis, iSuppli believes the source is TPK and/or Balda.

The main camera on the iPhone, a 5-megapixel autofocus device, costs $9.75, and accounts for 5.2 percent of the BOM. Like the touch screen, the camera cannot be identified from a teardown.

The Wi-Fi Bluetooth controller IC, priced at $7.80 and representing 4.2 percent of the BOM, is supplied by Broadcom Corp.

Other parts in the iPhone 4 include:

• The $5.80 battery, with an unknown supplier

• NOR flash, supplied by Intel Corp./Numonyx; and Double Data Rate (DDR) mobile DRAM, provided by Elpida Memory Inc., at a combined cost of $2.70.

• A $2.60 Microelectromechanical (MEMS) gyroscope, supplied by STMicroelectronics

• Infineon’s $2.33 quad-band GSM/Edge transceiver

• The $2.03 main power-management IC from Dialog Semiconductor.

• A Global Positioning System (GPS) chip from Broadcom, costing $1.75

• Texas Instruments Inc.’s touch screen controller IC, at $1.23

• Cirrus Logic’s $1.15 audio codec

• An e-compass from AKM Semiconductor Inc., at 70 cents

• The accelerometer, provided by STMicroelectronics, and costing 65 cents

More information on iSuppli’s iPhone 4 Teardown

For an online version of this release, including teardown photos and an exploded, annotated view of the iPhone 4’s innards, please visit: http://www.isuppli.com/Teardowns-Manufacturing-and-Pricing/News/Pages/iPhone-4-Carries-Bill-of-Materials-of-187-51-According-to-iSuppli.aspx

For more information on iSuppli’s iPhone 4 teardown, see iSuppli’s new report, entitled: iSuppli Takes on iPhone 4.

About iSuppli’s Teardown Analysis service

Anyone can crack open an electronic product and identify components. However, only iSuppli can provide the level of expertise in electronic components and pricing to serve the teardown needs of top technology companies throughout the world.

iSuppli’s teardown Analysis team is the most experienced in the industry and can draw upon a vast library of data and expertise that only a broad-line market-research firm can provide.

The team leverages the knowledge of more than 25 experts in various fields, all of whom have extensive electronics industry backgrounds and far-reaching expertise in equipment and component analysis.

iSuppli has been conducting teardowns for nine years, but the company’s background in this area goes back much further, with members of our management team having established and participated in teardown programs at another research firm starting in the mid 1990s.

The iSuppli Teardown Analysis service has dissected nearly 1,000 electronic products, from mobile phones of every variety, to personal computers, to set-top boxes, to video-game consoles, to high-definition televisions. The team engages in rigorous teardowns that enable a complete identification and accounting of all components found in electronic equipment.

The teardown team's extensive experience in dissecting electronic equipment allows it to make sophisticated observations regarding product design and component selection based on manufacturer, region of production, design approach and other factors.

Pricing for components found inside of equipment is determined using iSuppli's Component Price Tracker (CPT) service, which provides detailed information on costs for more than 350 components commonly found in electronic equipment, allowing iSuppli to develop highly accurate BOM estimates.

Component prices are subject to significant changes over time due to manufacturing learning-curve processes, as well as inventory and supply-and-demand issues. The CPT provides forecasts and updates of pricing movements that have unparalleled accuracy.

iSuppli's Teardown Analysis team also consults with iSuppli analysts covering various areas of the electronics industry to develop a comprehensive understanding of electronic equipment. iSuppli's analyst team covers every segment of the worldwide electronics industry, offering industry-leading expertise in equipment, components and supply chains.

For more information on iSuppli’s worldwide analysis team, please visit: http://www.isuppli.com/Pages/Analysts.aspx

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