iPhone 6 Component Costs Estimated to Begin at $200, Samsung Supplying Some A8 Chips

iphone_6_6_plus_compAs it routinely does for new devices, IHS iSuppli has taken apart the iPhone 6 and iPhone 6 Plus in an effort to estimate Apple's costs for the components included in the new devices, sharing the results with Re/code. According to IHS iSuppli's teardowns, parts and labor costs for the iPhone 6 are estimated to begin at $200 for the 16 GB iPhone 6 model, giving Apple a roughly 69 percent gross profit margin on the devices.

That number of course does not take into account an array of other costs, from research and development to software to marketing and distribution, but it does offer an interesting glimpse at what goes into an iPhone.

The margins are in line with more recent iPhone models but higher than the earliest ones. The gross margin on the iPhone 5, released in 2012, and the iPhone 5s, released last year, were about 69 percent, teardown studies at the time of their release showed. On the lower-priced iPhone 5c, also released in 2012, the gross margin was closer to 68 percent. By comparison, the gross margin on the very first iPhone, released in 2007, was closer to 55 percent.

Apple does earn slightly higher margins on higher-capacity iPhone 6 models, as the 128 GB of storage is estimated to cost $47 more than the base 16 GB storage while the device retails for $200 more.

The iPhone 6 Plus is also a higher-margin item for Apple, with IHS iSuppli estimating the device costs just $16 more to produce than the corresponding iPhone 6 models, with roughly half of that difference coming from the display and the remainder presumably related to the rear camera module with optical image stabilization, a larger battery, and other minor differences.

Another interesting observation from IHS iSuppli is that Samsung does indeed remain involved in production of the main A-series processor for the iPhone. Early teardowns had shown the iPhone 6 and 6 Plus using A8 chips manufactured by TSMC for the first time, but IHS iSuppli says TSMC is providing 60 percent of A8 chips while Samsung is handling the remaining 40 percent.

Related Forum: iPhone

Top Rated Comments

nagromme Avatar
123 months ago
Yes, because a "ziploc bag of parts" (some manufactured by means ONLY Apple has) is Apple's full cost.

There is no cost to transport those parts. No cost to assemble them. No cost to provide support for them. No cost to market and package them. No cost to transport and store them around the world. No R&D cost to develop the device in the first place. No cost to develop the OS or the apps. No cost for bandwidth. No cost for the cloud services behind it all. No insurance, no taxes, no patent fees. JUST a bag of parts.

...The cost of those parts are what they are to recover R&D expenses.

Thus, the only aspect of the iPhone evaluation that isn't being correctly assumed is ergonomics, advertising and software. As none of those things can be quantified. ...
"Correctly assumed" is wrong: iSuppli does NOT know Apple's R&D details. They don't know much--they guess as best they can at certain elements, because it's free publicity for them.
Score: 15 Votes (Like | Disagree)
6836838 Avatar
123 months ago
Completely pointless test, as it's doesn't capture R&D costs.

You might as well price up raw glass, metal and plastic...
Score: 10 Votes (Like | Disagree)
isoft7 Avatar
123 months ago
Samsung still making the processors for their biggest consumer rival, the likes of which they mock commercially.

Makes it easy to believe in an oligarchical world where competition is an illusion :O

Be very afraid.

:D

Remember, all of these large corporations care for one thing and one thing only... money.

The rest is an illusion perpetuated by their own exclusive fan base.

Apple fans are convinced that Jobs and now Cook really care about them as people. And through that, want to provide their customers a personalized welcoming experience. The reality is, that's all imaginary. All they want is to turn huge profits, make their stock holders happy and keep their jobs for as long as possible.

*REALITY
Score: 8 Votes (Like | Disagree)
AppleScruff1 Avatar
123 months ago
At least this article addresses the fact that it doesn't cost $200 to make an iPhone 6 - millions went into R&D and testing and such.
How many millions is key. If it was $150 million, that would add a dollar to the cost of the iPhone since they will sell somewhere around 150 million a year. If it is $1.5 billion, it would add $10 per phone.
Score: 7 Votes (Like | Disagree)
isoft7 Avatar
123 months ago
Don't put too much stock in the "RD" argument.

Remember, when they make these calculations, they're evaluating cost of individual components.

The cost of those parts are what they are to recover R&D expenses.

Thus, the only aspect of the iPhone evaluation that isn't being correctly assumed is ergonomics, advertising and software. As none of those things can be quantified.

That said, over the sale of all phones, given that much of what is now was taken from research prior, I wouldn't imagine the cost to produce being more than an additional $15 or so.

Bottom line, Apple could sell these devices for a LOT less. But they know their customer base well... they'll buy and pay for just about anything with the Apple logo on it. (that's blunt truth folks)
Score: 7 Votes (Like | Disagree)
0815 Avatar
123 months ago
and this does not even include the R&D that goes into those devices ....
Score: 7 Votes (Like | Disagree)

Popular Stories

General Apps Messages

Apple Announces 'Groundbreaking' New Security Protocol for iMessage

Wednesday February 21, 2024 6:00 am PST by
Apple today announced a new post-quantum cryptographic protocol for iMessage called PQ3. Apple says this "groundbreaking" and "state-of-the-art" protocol provides "extensive defenses against even highly sophisticated quantum attacks." Apple believes the PQ3 protocol's protections "surpass those in all other widely deployed messaging apps," according to its blog post:Today we are announcing...
iOS 17

iOS 17.4 Will Add These New Features to Your iPhone

Monday February 19, 2024 6:52 am PST by
Apple last month confirmed that iOS 17.4 will be released in March, and the update includes several new features and changes for the iPhone. Key new features in iOS 17.4 include major App Store changes in the EU and Apple Podcasts transcripts. The update also adds new emoji and includes preparations for the launch of next-generation CarPlay later this year. More details about the new...
Beyond iPhone 13 Better Blue Face ID Single Camera Hole

Six Reasons to Wait for Next Year's iPhone 17

Thursday February 22, 2024 4:20 am PST by
Apple's iPhone development roadmap runs several years into the future and the company is continually working with suppliers on several successive iPhone models concurrently, which is why we sometimes get rumored feature leaks so far ahead of launch. The iPhone 17 series is no different, and already we have some idea of what to expect from Apple's 2025 smartphone lineup. If you plan to skip...
samsung galaxy ring

'Apple Ring' Allegedly in Development to Rival Samsung Galaxy Ring

Tuesday February 20, 2024 2:27 am PST by
Apple is speeding up development of a smart ring that can be worn on the finger to track users' health biometrics, claims a new report coming out of Korea. Teaser image of Samsung Galaxy Ring shown at Galaxy Unpacked in January Apple has toyed with the idea of a ring wearable for several years, as indicated by several patents, but with Samsung preparing to bring its own product to market, the ...
volvo s60 drivers apple maps

iOS 17.4 Beta Adds CarPlay Option to Show Upcoming Maneuvers in Instrument Cluster

Tuesday February 20, 2024 10:47 am PST by
The fourth beta of iOS 17.4 that Apple released today adds a new CarPlay feature, according to the notes that Apple provided to developers. In supported CarPlay vehicles, there's now an Apple Maps option to show information about upcoming maneuvers in the instrument cluster. CarPlay users will be able to swap the display type between the main and instrument cluster by tapping on the map...
iPad Pro OLED Feature 2

Apple's Upcoming OLED iPad Pro Models Rumored to Be Much Thinner

Tuesday February 20, 2024 1:39 pm PST by
Apple is planning to update the iPad Air and iPad Pro lineups as soon as March, and the new iPad Pro models will be significantly thinner according to dimensions shared by 9to5Mac. Citing sources with knowledge of Apple's plans, the site claims that the larger version will be more than 1mm thinner. The current 12.9-inch iPad Pro measures in at 6.4mm thick, but the new model is said to be 5mm ...
Oled iPads and MackBook Pro Notch

Apple's OLED Roadmap: New iPad Mini, Foldable iPad Pro, and More

Wednesday February 21, 2024 5:29 am PST by
Apple is planning to launch at least nine new devices with OLED displays across the iPad and MacBook product lines, according to an updated forecast from research firm Omdia that sets out the company's plans in detail. As widely rumored, Apple's push to transition to OLED will apparently be jump-started by the release of new 11- and 13-inch iPad Pro models this year. The displays will...
m3 macbook pro 14 16

Apple Now Selling Refurbished M3 Pro and M3 Max MacBook Pro Models

Monday February 19, 2024 5:04 pm PST by
Apple today began offering refurbished versions of the 14-inch and 16-inch MacBook Pro models with M3 Pro and M3 Max chip options, offering the machines at a discount for the first time since their October 2023 release. The release of M3 Pro and M3 Max models on Apple's refurbished store comes almost two weeks after the entry-level 14-inch M3 MacBook Pro first appeared on the store....