3G iPhone Parts Cost Apple $173, $53 Less Than The Original

Tag : Hardware Parts

According to Silicon Valley research firm iSuppli, Apple was ableto leverage its buying power to keep the hardware costs of the 3GiPhone to just $173 (for the 8-GB model). That's $53 less than itpaid for the original iPhone's components. For the moment, analystsare suggesting that the unsubsidized cost of the device will benear $600. Pretty healthy margins, if you ask me.
How was Apple able to keep the hardware cost of the 3G iPhone solow? Well, most of the device is unchanged from the original,meaning Apple was able to use economies of scale in its favor andsimply order more of the parts it was already using. As for theparts that differ, bringing in the 3G chipset didn't set Apple backtoo much. It turns out that German chipmaker Infineon did win Apple's business after all and is supplying the 3G radio.ISuppli was not able to determine the exact cost of the 3G radiochip, but it apparently isn't much more than the original's 2.5Gchip.
Other parts, such as memory, are widely available, and Apple hasmajor purchasing power here. It buys massive amounts of memory forthe iPhone, as well as its lineup of iPods. Large volumes help tokeep down costs, which are estimated to be $23 for the 8-GB memorychip and $46 for the 16-GB chip.
Based on the sales price of the 3G iPhone (estimated to be between$600 and $625), the cost of components and other royalties thatApple has to pay, it will still net about $281 for the 8-GB iPhone.Not bad profit at all.