New 3G iPhone costs $173 to make: iSuppli

The new iPhone costs just US$173 to make.

The mystery behind why the new iPhone is so cheap may be solved, with market researcher iSuppli saying it costs just US$173 to make.

Apple caused a stir earlier this month when it launched the new 3G (third generation mobile telecommunications) iPhone with a $199 price tag. Similar products from rivals cost much more. Taiwan's High Tech Computer (HTC), for example, has priced the Touch Diamond at NT$23,900 (AUD$795) for its home market, while Nokia estimates its new N96 smartphone will retail for Euro 550 (AUD$895).

All three handsets are due on store shelves soon.

There are two main reasons Apple can charge so little for the new iPhone, iSuppli said Tuesday. First, mobile phone service providers will subsidize the handsets by paying Apple about US$300 per unit, iSuppli estimates. The other reason is the low cost of materials going into the handset.

Apple did such a good job choosing components for the new 3G iPhone that it costs less to make than the old version, despite significant improvements, iSuppli said. The old iPhone cost $226 to make and did not include 3G nor GPS (global positioning system). Yet Apple sold the original iPhone for $499 initially.

The most expensive component on the 3G iPhone is the 8G bytes of NAND flash memory storage, at $22.80, followed by the touchscreen at $20, iSuppli estimates.

In all, the chips and other components in the handset add up to $164, and then iSuppli estimates Apple is paying another $9 for assembly of the device, for a total of $173.

Taiwan's Hon Hai Precision Industry, the world's largest contract electronics manufacturer, is making the new iPhone at factories in China.

The market researcher calls its estimate a preliminary one based on a "virtual teardown" of the new iPhone. The estimate is based on information available about the new handset. Once the 3G iPhone is on the market, iSuppli plans to open one up to figure out the make and model of each component inside, to more exactly determine the cost of the handset.

The initial estimate also does not include the cost of software development, shipping, distribution, packaging and accessories included with each iPhone.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?