Research firm IHS has followed up its virtual teardown of the iPhone 5 with a brand new physical teardown, confirming its materials list and also the cost of manufacture for the latest Apple smartphone. The physical teardown reveals that the new iPhone costs between $207 and $238, including all suppliers and cost of assembly, depending on whether you look at the 16GB, 32GB or 64GB model.
That means that margins for Apple are between $442 and $611, not counting expenditures related to shipping, marketing, retail and other overhead. Apple’s margins are actually improved on high-end devices according to IHS, while lower-end iPhone 5s actually cost a little bit more to make than their predecessors did at launch.
The relatively unchanged margins are impressive, given that according to the teardown, the new iPhones have double the RAM, more expensive, larger in-cell displays, an improved processor and beefed up cameras and cellular wireless chips. To compensate for those increased costs, however, Apple has managed to get lower pricing on batteries and Wi-Fi radio, and NAND flash storage prices, traditionally one of the most expensive components, has actually halved.
Sandisk is the iPhone 5’s key vendor for flash memory, according to IHS, which marks a first, since IHS has found Samsung memory in past devices. Sony providing the battery and camera modules, Samsung delivering the processor and Qualcomm providing the wireless baseband processor.
Apple leads the smartphone industry in profit margins, which has helped it take up to 77% of total profit among smartphone vendors according to some recent estimates. That’s unlikely to change much with the iPhone 5 and the latest generation of devices coming from Samsung and others, if IHS’s teardown is an accurate estimate of what Apple’s making on the sale of each iPhone 5.