IHS teardown finds iPhone 5S costs $199 to build, 5C even less

By on September 24, 2013, 12:15 PM

A recent teardown of Apple’s latest iPhones from IHS found that Apple spends at least $191 on components to build a 16GB iPhone 5S and up to $210 for a 64GB model. Factor in assembly cost and you’re looking at between $199 and $218 for a phone that sells for either $649 or $849, respectively.

This year’s flagship is actually a little cheaper to build than the iPhone 5 last year even with some new components like the Touch ID fingerprint sensor. If you recall, IHS pegged the original iPhone 5 at around $207.

As we have seen in the past, the phone’s display is the most expensive component of them all – accounting for about $41 when all associated parts are included. Displays were likely sourced from several vendors including Sharp, LG Display and Japan Display Inc.

The colorful iPhone 5C is believed to cost Apple between $173 and $183 to build which is said to include a $7 assembly fee. These handsets (16GB and 64GB) retail for between $549 and $649 off contract, respectively.

IHS analyst Andrew Rassweiler oversaw the teardowns and said the two different models are almost the exact same phone. The key differences of course being that the 5S has the A7 processor, some newer memory chips that consume less power and the fingerprint sensor. Beyond that, the two are basically the same, he said.

IHS’ report isn’t due out until tomorrow but they granted All Things D early access to their findings.




User Comments: 30

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Moxiy Moxiy said:

So this guys overcharge us or what?

1 person liked this | Guest said:

As long as people will buy them, Apple is going to charge what they like. Your not paying for the phone, your paying for the name. Don't seem like people are to concerned about the price since Apple sold 9 million phones within the first day or so.

coppersloane coppersloane said:

And yet people clamor for these things like they're made out of diamond.

JC713 JC713 said:

There is very little profit margin here. I wonder if they must get some sort of cut from the carriers or something.

1 person liked this | Guest said:

But these are merely hardware production costs, they do not include even such things as packing and delivery of parts and ready products from factories. Not to mention costs of research, design and software. As if it all comes free. I'm surprised these things are not mentioned in the article.

Railman said:

But these are merely hardware production costs, they do not include even such things as packing and delivery of parts and ready products from factories. Not to mention costs of research, design and software. As if it all comes free. I'm surprised these things are not mentioned in the article.

Not forgetting that the retailers also need a margin. All those shops on high street cost a bit to run.

VitalyT VitalyT said:

It is hard to put an estimate on all of the R&D and marketing that went into this thing to see the real cost.

hahahanoobs hahahanoobs said:

There is very little profit margin here.

A $200 phone that sells for $700 has very little profit margin? Um... ok.

They must get some sort of cut from the carriers or something.

Um... what about their app store, or their accessories? How can you miss this?

example:

Current gen consoles sell at a LOSS, but they make profits from games, accessories, online accounts, etc. The same formula applies here, except Apple isn't losing money on each device.

JC713 JC713 said:

A $200 phone that sells for $700 has very little profit margin? Um... ok.

Um... what about their app store, or their accessories? How can you miss this?

example:

Current gen consoles sell at a LOSS, but they make profits from games, accessories, online accounts, etc. The same formula applies here, except Apple isn't losing money on each device.

I am talking about an on contract phone... you pay $200 for it. But then the rest goes toward data and service.

The app store is a big part I guess, but I would expect the profit to be less than what they make from hardware.

hahahanoobs hahahanoobs said:

I am talking about an on contract phone... you pay $200 for it. But then the rest goes toward data and service.

The app store is a big part I guess, but I would expect the profit to be less than what they make from hardware.

That has no relevance to this article whatsoever. :|

p51d007 said:

So, Apple makes a "profit" (yes I know...marketing, shareholders, suppliers bla bla bla)

of almost 700 bucks for the big iPhone, and the anticapitalist, anti pretty much everything except

Apple drones are ok with this, because it isn't "big Pharma, big oil etc?

Where are the protests? Where are the congressional hearings on price gouging? Where are the demands for a boycott? Nary a word because it is Apple.

Personally, I could give two hoots about what any company charges for a product. If they charge too much and no one buys it, they lose business, but Apple is getting away with it because people are willing to pay through the nose just to have the latest iGadget.

JC713 JC713 said:

That has no relevance to this article whatsoever. :|

So what? It is just something I was wondering? Quit being so cynical.

hahahanoobs hahahanoobs said:

So what? It is just something I was wondering? Quit being so cynical.

Didn't sound like wondering at all. Maybe if you added the words, "I wonder", I wouldn't have wasted my time.

JC713 JC713 said:

Didn't sound like wondering at all. Maybe if you added the words, "I wonder", I wouldn't have wasted my time.

Happy buddy?!

Guest said:

I hope you all know even the flagship samsung galaxy phones break down to this much too...

As a side note: Windows 7 only costs $0.20 to make since it is the cost of the DVD right?

1 person liked this | slh28 slh28, TechSpot Paladin, said:

The real scam is charging $200 more for a 64GB phone when the it only costs $20 more to manufacture.

Emexrulsier said:

It's not just Apple though it just people simply see the word Apple and blank out others. Take for example the Samsung Galaxy S4. From the same IHS reporting they claimed it costs around $230 to manufactur yet the recommended retail price of the Galaxy S4 (sim free) is $959!! a massive profit per handset of $729.

I don't use apple but that isn't because they company is trying to make a profit from supply and demand its for more own reason (infact I use the GS2 ).

Apple hate mongers simply need to open the eyes a bit wider...

Emexrulsier said:

Ofc not everyone is dumb enough to pay RRP on the GS4 but its the same for iphones aswell.

1 person liked this | Skidmarksdeluxe Skidmarksdeluxe said:

That has no relevance to this article whatsoever. :|

So what? It is just something I was wondering? Quit being so cynical.

Ignore him. Hopefully he'll go away.

Skidmarksdeluxe Skidmarksdeluxe said:

Irrespective of what these things cost to make, when all is said and done, making as much money as possible is the name of the game. If people want to throw their money at Apple, let 'em just as long as it's not mine.

Blue Falcon said:

"recommended retail price of the Galaxy S4 (sim free) is $959!! "

Who wants a SIM free phone unless you don't travel over the world.

I am passing through Kyrgyzstan and S4 costs $582 USD. $959 sounds like a number you pulled out of thin air.

Guest said:

Love how everyone bitches about the price because "Apple is a big evil corporation" Give me a break. What do you think it costs to make a majority of tech gadgets available to consumers? Marketing costs, selling to distributors who also need to make a profit? Do you realize the R&D and operating costs nevermind the salaries paid to employees @ Apple factored in to pay for the technology to manufacture these devices on this large of a scale? Also do you realize what these devices would cost if they weren't put together using labor in China? Try getting Americans to put together this stuff for the little pay given to the Chinese. Keep in mind it's companies like Apple, Samsung, Sony, Microsoft, and Google who allow for progress to be made so that we can own these devices at a cost within reach.

hahahanoobs hahahanoobs said:

Ignore him. Hopefully he'll go away.

Doubt it. He comments on every article.

hahahanoobs hahahanoobs said:

But these are merely hardware production costs, they do not include even such things as packing and delivery of parts and ready products from factories. Not to mention costs of research, design and software. As if it all comes free. I'm surprised these things are not mentioned in the article.

If you know what a BOM is, then it doesn't need to be said.

Guest said:

^^^ This! So Much This!!! The cost of OS dev, circuit design, patenting, marketing, overhead, hell even how to pack the components into the case is part of this cost. I'd be willing to bet that in fact Apple makes a very slim margin on the cost of the base phone. There is however absolutely no design difference in adding more storage. This is where they start making money.

Guest said:

Here's what my GF's thoughts:

after hearing the material only cost $199

"..like I care, it's still better than those overpriced plastic smartphones"

after hearing there's also plastic version of iphone

"..with the loss of Steve, apple is kind of stupid making a move like this, with the revelation of plastic version now you can feel iphone is NOT exclusive anymore, because there is a cheaper version available"

after looking the new UI of iOS 7

"..WTF? Since when iPhone using android?"

..now she think twice before she replace her iPhone

Skidmarksdeluxe Skidmarksdeluxe said:

Doubt it. He comments on every article.

He's entitled to do that but the good thing is you don't have to read them

Guest said:

Apple sells the phones to the carriers at full price. The phone company then offers the phone for $199 with a 2-year contract hoping to make money off of the contract. The phone company is the one who losses money initially.

1 person liked this | hahahanoobs hahahanoobs said:

He's entitled to do that but the good thing is you don't have to read them

Touche.

Railman said:

Apple sells the phones to the carriers at full price. The phone company then offers the phone for $199 with a 2-year contract hoping to make money off of the contract. The phone company is the one who losses money initially.

Do you have any proof that carriers buy at full price? I cannot imagine them doing that as there is no financial logic to it. If Apple insisted on that I am sure the carriers would go with Android/Windows phones instead.

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