Apple’s iPad Air Cost-To-Build Estimated At Less Than iPad 3 At Launch

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Apple has released its iPad Air, and while we don’t yet know how many it sold during opening weekend (it’s likely waiting to reveal launch numbers until the iPad mini with Retina display goes on sale), we do know that it seems to be enjoying strong adoption rates. The cost of building this latest iPad should help Apple’s product margins, too, if a teardown by analyst firm IHS iSuppli (via AllThingsD) is any indication.

IHS regularly makes a point of trying to backwards engineer the cost of building a brand-new Apple device by tearing them down and looking at what goes into one. This year, it estimates that Apple’s iPad Air runs between $274 and $361, for the $499 16GB Wi-Fi only model at the low end, and the $929 128GB Wi-Fi + LTE version at the top.

As usual, margins are higher the further up the chain you go, but what’s remarkable about this device is that it actually costs an estimated $40 or so less than the third-generation iPad did (IHS didn’t revise its figures for the fourth-generation iPad release) when it first launched, at every price point and model. That’s despite featuring a much more expensive display and touchscreen assembly that combines some layers to result in a a thinner overall package. Measurement for the touchscreen assembly is now at 1.8 mm, which is down from 2.23 mm on previous versions.

There are savings in other areas, however, since the display requires fewer LED units (36 vs. 84 before) to power the screen, and that’s mostly because apart from the screen, many of the components are held over from older versions. The A7 is actually cheaper than the A5 was back in March when the iPad 3 launched, and the cellular array used in the iPad covers all LTE frequencies in the U.S., which means cheaper manufacturing costs overall since it only needs to make one version.

Apple eking out more margin on the iPad Air could result in huge upside for it going into a busy holiday season, especially if numbers prove as strong as early evidence suggests they could be. The iPad mini, too, might enjoy a boost to profit for Apple, given that it also uses the A7 and appears to share a lot of componentry in common both with the full-sized iPad Air and with its predecessor.