iPhone 3GS Costs $172.46 to Make

iPhone 3G S Component Cost Revealed

Apple's iPhone 3GS gets torn down again but this time for a completely different reason.

Folks at iSuppli, a market research firm, carried out this dissection in order to find out the cost of the components used in iPhone 3GS and have come up with some interesting findings.

iSuppli regularly analyses the components and the manufacturing cost of some of the popular smart phones. As per their latest analysis on iPhone 3GS, the phone costs $172.46 to make and a manufacturing cost of $6.50, which sums up to a total price of $178.96.

As quoted by their director and one of the principal analysts of their teardown services:

"This is slightly higher than iSuppli's estimate of $174.33 for the original 8Gbyte iPhone 3G based on pricing in July 2008.

Although the retail price of the 16Gbyte iPhone 3GS is $199, the same as for the 8Gbyte version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions."

Apple has used components that also exist in the iPhone 3G while also taking advantage of the price drop that has hit the electronics industry. The price drop has helped Apple in adding some high-end components and more features to the iPhone 3GS at a slightly higher price.

Following is a brief summary of some of the major components used in iPhone 3GS along with their estimated cost.

1. Flash Memory:

It is used to store video, music, applications etc and is one of the costliest component in iPhone 3GS. Apple has used the Toshiba manufactured 16Gbyte Multilevel-Cell (MLC) NAND flash Memory in iPhone 3GS.

Apple did benefit from the earlier drop in price but now the price of flash memory has gone up due to a supply constraint. This supply constraint is a result of the current economic slowdown that forced manufacturers to cut down on production.

Estimated Cost: $24 (16GB iPhone 3GS) and $46 (32GB iPhone 3GS)

2. Display Module:

The 3.5" diagonal display, the 16M color TFT and the 320 X 480 pixel screen form part of the display module on iPhone 3GS.

Estimated Cost: $19.25

3. Baseband - GPS Receiver - RF Transceiver:

Infineon continues to supply the PMB8878 baseband chip that handles the connection with AT&T's wireless phone network along with the two other chips that handle the power management and the reception of signals from GPS satellites.

Estimated Cost: $16.50

4. iPhone 3GS Screen:

iPhone 3GS has a capacitive multi-touch screen that comes with an oleophobic coating, which makes the iPhone 3GS screen oil and smudge resistant. The cost of screen and its related components have become $1 cheaper compared to their earlier price.

Estimated Cost: $16

5. Application Processor:

Samsung remains the sole Applications processor supplier for both iPhone 3G and iPhone 3GS.

Estimated Cost: $14.46

6. Camera Module:

As we all know, the iPhone 3GS comes with a 3 mega pixel camera with an auto focus feature.

Estimated cost: $9.55

7. Chips and Semiconductors:

The current iPhone 3G uses two different chips, one is a WLAN chip and the other is the Bluetooth Integrated Circuit. However, with iPhone 3G S, Apple has introduced a single chip device that is manufactures by Broadcom Corp. and is capable of both Bluetooth and WLAN.

It's interesting to note that the same chip comes with a tiny FM radio receiver on board, even though the iPhone 3G S has no FM-receiving features. Possibly, for future upgrades when Apple makes FM available on iPhone.

Estimated Cost: $5.95

Apple has also replaced the NXP Semiconductor device used in iPhone 3G with Dialog Semiconductor's power management IC.

Estimated Cost: $1.30

8. The Digital Compass:

In order to implement this new feature, Apple has included AKM Semiconductor Inc's electronic compass that detects device movement relative to the magnetic north.

Also included is STMicroelectronic's accelerometer, which determines the orientation and inclination of the device.

Both put together allow the iPhone 3G S to orient the map based on the direction the user is facing.

Estimated Cost: not known

9. Processor:

The iPhone 3GS uses an ARM RISC microprocessor running at 600MHz clock speed in comparison to the 400MHz used in the iPhone 3G.

Estimated Cost: not known

iSuppli also clearly mentioned that their 'iPhone 3G S teardown analysis' does not include the cost associated with the following:

  • Software Development cost
  • Shipping and Distribution charges
  • Packaging and Accessory costs
  • Royalty fee
  • Advertising and Manpower related costs

In my opinion, the analysis carried out on the component cost cannot dictate the market price of an item. Market price is driven by various factors and in case of iPhone, it is mainly driven by the simple fact that it has been the only ground breaking invention in the already overcrowded market of smartphones. Hence, the high price of iPhone 3GS.

It also seems fair to assume that by giving subsidy, AT&T is helping the end users. A subsidized iPhone 3GS is much more lucrative to the end user instead of paying the market price of a contract free iPhone 3GS, which is already hundreds of dollar more than the manufacturing cost.

What do you think about this price tagging done for iPhone 3GS? Do let us know your thoughts in our comment section below.

[via iSuppli]

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