According to a teardown analysis of Apple’s new 4-inch iPhone SE by research firm IHS, it costs Apple approximately $160 to build and assemble the 16GB version of the device which it is currently selling for $399 contract free, Re/Code is reporting. The firm tore down a 16GB iPhone SE in order to assess the approximate cost of the components used and also to determine the identity of suppliers.
Analyst Andrew Rastweiler, who also supervised the teardown, revealed that the cost rises to about $170 for the 64GB version, which sells for $499 without a contract. He also said that the price of 16GB version is specifically targeted at encouraging buyers to opt for the 64GB version instead, when making their buying decision. Rassweiler said that the iPhone SE contains parts that have been used in three other iPhone models as well.
“The potential profit margin on the 16-gig phone is lower than it is on the 64-gig version,” he said. “Apple is selling the phone with the higher storage for $100 more but only about $10 in additional cost.”
While externally it looks very much like the iPhone 5s, which was Apple’s primary phone starting in mid-2013, it contains the same chips for connecting to cellular networks as the iPhone 6 and the same Apple A9 processor as the iPhone 6s. Chipmaker Qualcomm supplied the cellular chips, adding $15 in cost. Apple designed the A9 processor which added $22 to the final bill for parts. The chip is built by two companies: South Korea’s Samsung and Taiwan Semiconductor Manufacturing Corp.
IHS also highlighted that Apple’s decision to opt for a prior generation’s display technology for the iPhone SE reflects the company’s low-risk strategy, in case the device does not succeed in the market as expected.