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iPad's pure manufacturing cost: $259.60

updated 07:55 am EDT, Wed April 7, 2010

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]


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By Electronista Staff
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Comments

  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008

    -4

    The high cost of Unicorn tears...

    It's not cheap to have all those employees running up and down, cheering and hand-clapping whenever a new store opens or a new product goes on sale. Somebody has to pay for the cost of those free T-shirts, too.

    Apple always seems to be under scrutiny when it comes to the true cost of their products.

  1. dynsight

    Fresh-Faced Recruit

    Joined: May 2005

    +12

    IDL and Overhead

    If you take ANY manufactured component, anywhere, and do a breakdown, you would be surprised. Some new products tend to be more expensive as a way of accounting for R&D (all the failed pads that did not make it to market) Advertising, Management, QA TESTING, etc.

    Indirect Labor and overhead costs are impossible to guess in IT, so someone tries to convince us that a company is ripping you off because they make it for 60% of selling costs.

    Do a breakdown of that Mercedes you covet

  1. snork

    Fresh-Faced Recruit

    Joined: Feb 2008

    +9

    RE: IDL & Overhead

    dynsight, you're exactly right. To further your car analogy. The average midsize car which costs $20k-$25k has an actual average manufacturing cost of $8,500 for parts and labor. But nobody seems to gripe too much about that! It cost real money to R&D any consumer product.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    -1

    a4 processor

    A while back it was assumed that the new a4 processor would cost about 1 billion dollars in R&D, that would ad $78 in cost for the first 13 million iPads. Apple should sell that many somewhere next year, perfect timing for a lower $350 price tag.

  1. msuper69

    Professional Poster

    Joined: Jan 2000

    +4

    this is nonsense...

    try making an iPad on your own. Now how much does it cost?

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -4

    cost breakdowns

    Apple always seems to be under scrutiny when it comes to the true cost of their products.

    iSuppli guesstimates the prices of all sorts of products, not just Apple ones. Of course, you only read about the Apple ones, since this is the only place you probably ever hear about them.

    And all they are doing is reporting 'facts'. It's a cost breakdown, nothing more. You just get offended because it 'seems' like they must be proclaiming the iPad is way overpriced because they even mentioned it in the first place.

    h***, even the article above states "Not including development, patents and sales, " Truth is, no one knows how much it cost to produce (and those that do won't be telling). In fact, Apple could be negative on the iPad for a few years before they cover their R&D costs.

    So how about losing the "Why is everyone always trying to tear poor apple down!" routine.

  1. wrenchy

    Forum Regular

    Joined: Nov 2009

    -4

    You forgot...


    ...The cost of the fridge to cool your overheating iPad down on a warm, sunny day.

    "Sorry honey, can't use the iPad on the road today. The sun is out."

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