Apple still keeps margins on tablet costs

The raw cost of making an iPad is just over half of its $499 retail price, according to an iSuppli cost breakdown. Not including development, patents and sales, building a 16GB Wi-Fi iPad costs about $259.60. Apple's largest cost is the unique 9.7-inch multi-touch screen, which is made by LG Display along with help from Epson, Samsung and Wintek; it should cost about $95.

Flash memory is the next most expensive component but, as is often the case with Apple produces, doesn't directly correlate to the $100 gaps in prices. The 16GB of Samsung flash on the base model costs about $29.50, but moving to 32GB costs $59; the 64GB on the flagship iPad costs $118. As such, it costs less than $100 more to make the 64GB model, or $348.10, despite it commanding a $200 retail price premium.

Such cost differences aren't unusual in electronics, as margins are often kept smaller on entry systems to keep the price lower while those buying more expensive versions help offset the tight costs below.

The Apple-designed A4 processor is actually just the third most expensive component in the tablet, at an estimated $26.80; this is still more expensive than the originally estimated $17 as it includes built-in Samsung memory. More components are in the iPad than were expected but make up a relative minority of the price. Broadcom has one of the largest influences with a $8.05 Bluetooth/Wi-Fi combo chip and two minor touchscreen controllers worth $3.70. Texas Instruments also helps with the touchscreen using a $1.80 part, and Cirrus Logic provides a $1.20 audio chipset.

It's not known how much of the actual price is pure profit, but the significant padding between the pure assembly costs and official pricing suggests that Apple plans to follow a similar strategy to the iPhone and iPod where it can afford to upgrade iPad features relatively quickly. [via BW]

By Electronista Staff

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