iPad Air reportedly costs Apple between $274 and $361 to produce

By on November 5, 2013, 11:45 AM

Some new data on how much it costs Apple to produce the iPad Air has surfaced from IHS courtesy of All Things D, and looks as though the company is making top dollar on its most well received tablet to date. Based on the data, Apple is making as much as $568 per unit.

According to IHS, the iPad Air costs Apple between $274 and $361 to manufacture, a number that varies depending on the model. At retail, an Air will run you anywhere from $499 all the way up to $929 for the 128GB model with Wi-Fi and cellular technology, so with some simple math we can see Apple is doing quite well for itself with the new offering.

To break it down, the data points at the device's display as being most costly, factoring for more than half the cost of the lower end model. IHS says that the screen itself runs Apple around $90 and the touch screen elements add on another $43.

Beyond that, the researchers say that Apple has done a good job of cutting costs quite significantly compared to previous options, the base model iPad Air is in total $42 cheaper to produce than the third generation entry model iPad. This time around Apple has managed to cut better deals with its suppliers due to not having made many intensive changes to the design, allowing them to bring the cost down on certain components. The Samsung manufactured A7 chip only costs the company $18, a number that has reduced from the $23 the company was spending on the A5 processor just a year and a half ago.

So in total, IHS estimates that the company's margins on the new iPad Air sit at around 45% for the 16GB base model and 61% on the 128GB LTE version. You can see the call-out slide from IHS's research below:




User Comments: 4

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2 people like this | VitalyT VitalyT said:

Double that from R&D expenses, to create so much coveted high-tech product, and relax about pricing.

3 people like this | Guest said:

+ shipping, duds\warranty service, software development, support, sales force, advertising and so on. Manufacturing costs on their own are not particularly meaningful.

1 person liked this | MilwaukeeMike said:

At retail, an Air will run you anywhere from $499 all the way up to $929 for the 128GB model with Wi-Fi and cellular technology, so with some simple math we can see Apple is doing quite well for itself with the new offering.

Except that leaves out all the other stuff that both posters above me already pointed out. Seriously, these articles about variable cost, with no mention of the fixed costs are what contribute to the criticism that the internet makes you dumber and not smarter.

JC713 JC713 said:

Good profit margin.

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