Teardown Analysis Estimates 16 GB Wi-Fi iPad Air 2 Costs $275 to Build

Ipadair2 exploded

The bill of materials for the second-generation iPad Air is exactly $1 higher than the previous-generation model, at $275 for the 16 GB version, say research firm IHS, as reported by Re/code.

While the entry-level iPad sells for $499, the top-end model has a selling price of $829, but costs $358 to build, the firm highlights. There is a noticeable drop in profit margins, IHS analysts say, to a range of 45% to 57% depending on the iPad model, compared to the original 45% to 61%.

The most expensive component remains the display supplied by LG Display and Samsung, at $77, which accounts for 28% of the BOM. It’s basically the same display as before, IHS analyst Andrew Rassweiler says, but it sports an anti-reflective coating. Oh, and it’s $13 cheaper than last year, when Apple paid $90 for the display.

There were rumours of Apple shifting away (some) chip production from Samsung, and this year it has finally happened (although not all): the A8X chip found in the iPad Air 2 was manufactured by TSMC.

The average cost for flash chips, Rassweiler says, is about 40 cents per gigabyte. Apple spend about $9.20 on memory for the low-end 16 GB devices but as much as $60 for the higher-end 128 GB devices, but charges $300 more at retail for the higher memory. “Apple reaps a pretty good profit for all that memory,” Rassweiler says. SK Hynix, supplied the memory for the device torn down though Toshiba and SanDisk are considered likely memory suppliers as well.

Apple has decided to foster “iPadeography” by incorporating a better, 8 MP rear camera into the second-generation iPad Air. While IHS couldn’t identify the camera supplier, the combined cost of the two cameras is $11, slightly higher than last year.