‘Virtual Teardown’ Reveals iPhone 5 Costs Apple $199 To Build


Today iSuppli Teardown Analysis Services completed what’s called a ‘virtual teardown.’ The company bases the teardown solely from specifications released by Apple and combines it with information on the internals already known. Everything stated on below is just an estimate.

Apple’s 16 GB iPhone 5 costs a total of $207 to build and manufacture in total. The 16 GB and 32 GB models follow closely ahead in price at $217 and $238! Interestingly enough Apple is tacking on $100 more to each model although it only costs them $10 to $20 more to produce.

The full chart above provides the costs of all components individually found inside the iPhone 5. Through all three models, the only changes made are to the NAND Flash category.

“With the base model carrying a $199.00 BOM, the iPhone 5’s components are expected to be slightly more expensive compared to the iPhone 4S model,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “The low-end iPhone 4S with the same memory density as the base-model iPhone 5 carried a BOM of $188.00, according to a preliminary estimate issued by IHS in October 2011. 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.”

If you recall, the iPhone 4S costs around $196 to build, while the iPhone 4 was just a dollar short at $195. The 3GS was even cheaper, just $187 per unit.

iSuppli notes that the larger touchscreen display, LTE chip, and A6 chip are the culprits behind the heftier pricing. NAND Flash on the other hand dropped significantly in price.

Do you think Apple is charging us users too much for the iPhone? All smartphones carry similar pricing, so Apple is just continuing the trend in my mind.


  • CptKirk

    They can charge what they want, they know most of us will pay it. What surprised me more was the difference in cost to increase storage. If this is the case I would hope the maybe started with the next gen of the iPad they double the storage.

    I would like to see the iOS devices start at 32GB.

  • RyanStOnge

    True, all companies do it anyways. And most of us pay it anyways thanks to carrier plans.

  • yvrgal

    You’re also forgetting that these are just parts. What about the cost having these people put it together? The design team who put in countless of hours on it? The thousands of employees of Apple they have on their payroll? The software that came with it? There’s more involved to just the breakdown of parts to make sure they are recouping cost. They do make money and the richest company to date. But isn’t that what running a business is all about? To make money.

  • I think that price is more then adequate. Every manufacturer sells a product for 3x more plus retail stores need to gain profit too, so they need to increase the price a bit more too.

  • NotPron

    Apple set the trend in my mind. They are making as much as 300% on they’re devices, if you dropped that to 200% the 64GB model would cost $480 and with the amount they can sell at that price it would not decrease the company’s value IMO.

    Also typo in the device price listing. You have 16GB twice and no 64GB model.

  • Brian

    With the volume they sell, overhead costs are bordering on negligible. How much has really changed since the first iPhone? Developing the processor probably costs a lot but they use it in iPhone, iPad, iPod, Apple TV, etc. Marginal costs like parts and labour are the vast majority of actual cost for each device. Obviously they have server farms and whatnot, but I’m sure the money they charge for premium services related to iCloud covers that cost, not to mention the 30% they make on every app and song purchase.

    As for why not making more 32 and 64 models since they’re so cheap, the answer is simple: they don’t have to. People will buy the device anyway. Next year when they have nothing new to add, they can simply knock out the 16 model and add a 128 and everybody will be in awe. And we shoudln’t be surprised that they’re charging so much to upgrade to 32/64 models despite the relative cost. Look at what companies like Intel do with their processors. It costs no more to make every single one of them a top-of-the-line i7 whatever-you-call-it, but they purposely limit the capability of most of the chips in order to be able to charge a premium for the best ones. Why else do you think they can sell coupon codes that “unlock” higher processor speeds? This is nothing new. They can sell 10 million i7 processors for $100 and not be able to justify charging more to the people that are willing to pay for a faster one, or sell 9 million i3 processors for $100 and 1 million i7 processors for $500. Overall the cost is the same, but the profits made by crippling the i3, changing perception, and being able to charge more to customers that are willing to pay more for the i7 is enormous.

  • Thomas

    I don’t think you are correct about the other costs being negligible. I have read in several places that the cost of developing the A6 chip alone was as much as 500 million dollars. I am sure the amount of money that went into the rest of the design was substantial. Then there is the cost of shipping, marketing, support, warranty repairs and so on. Traditionally Apple has reported profit margins of 30 to 40 percent in their quarterly earnings. The iPhone is one of their highest margin devices but I doubt their margin is 60 percent. As their most popular device, their margins on everything else would have to be really low to offset the iPhone at 60 percent for an overall 30 percent profit margin. Based on information elsewhere we know their margins on Macs and iPads are good and most companies make good margins on cords and adapters. The only part of their business that we know brings in lower margins is the iTunes Store and the App Store but neither of those accounts for a large portion of their revenue.

    As for your claim that there is no difference in price to manufacture an i7 versus an i5 or i3 is not entirely accurate. Quite often different levels of chips will be the same but have parts disabled or be set to run at different clock speeds. The truth is that not every chip on a wafer is manufactured perfectly. Some will have defects and if the defect in the chip is in the section that is disabled on the lower end model then that chip can still be used. As the manufacturing process improves though, more of them will come out perfect but you may still sell them as the lower end model depending on how much demand you have for the different chips. If you get one that has no defects in the disabled part of the chip and handles higher clock speeds well then you may be able to unlock the chip and run it as the higher end model. It’s not guaranteed that a chip that comes off the same wafer as an i7 but sold as an i5 will be able to function as an i7.