Apple iPhone 4 Costs as Much as $700, but Apple Pays $187.51 for Parts

Exactly what's inside an iPhone 4, and how much does Apple pay for those parts? The cost of components has stepped up slightly from $170.80 with the iPhone  3GS to $187.50 for the iPhone 4, although it's not nearly as steep as the $217.73 that Apple paid to buy the parts for the first iPhone in 2007, says new research from iSuppli.

Considering that the component costs are so low, Apple is making big bucks off the iPhone 4 given current pricing for the new phone, according to the analyst firm.

"With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve -- one whose size is exceeded only by Microsoft Corp.," said Kevin Keller, iSuppli's principal analyst for teardown services, in a recent statement.

A Nice Margin
In a similar analysis of the iPhone 3GS in June of 2009, iSuppli tacked on a manufacturing cost of $6.50 to the $170.80 cost of the componentry in the bill of materials (BOM).

"Although the retail price of the 16 GB iPhone 3G S is $199, the same as for 8 GB version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions," noted Andrew Rassweiler, another iSuppli analyst, back in 2009.

Similarly, AT&T is now selling the iPhone 4 for about $200 to subscribers and others who have earned subsidies from the carrier. However, consumers might pay $600 to $700 if they buy an iPhone 4 on an unsubsidized basis from an Apple Store or at Best Buy, WalMart, or Radio Shack, for example.

High-res Display the Priciest Part
iSuppli's analysis of the iPhone 4 leaves out manufacturing as well as all other costs to Apple, such as software, royalties, and licensing fees. For some components, iSuppli was able to definitively name the supplier of the component in its report. Yet for other parts, the analysts either guessed at the supplier or listed the supplier as unknown. In the rundown below, the supplier's name is only given when it's been definitely identified by iSuppli.

In the $187.51 BOM for the iPhone 4, the LCD display, costing $28.50, is the single most expensive component. "The 3.5-inch display uses advanced Low-Temperature Polysilicon (LTPS) and in-Plane Switching (IPS) technology, and features a 960-by-640 resolution -- four times that of the iPhone 3GS," according to iSuppli's report.

The second priciest component is that NAND-type flash memory, costing $27 for the 16 GB version of the iPhone 4. Third on the list is the iPhone 4's 4 GB of Double Data Rate (DDR) SDRAM, priced at $13.80.

Next comes a baseband Integrated Circuit (IC) from Samsung, costing $11.72, After that, at $10.75, is an A4 applications processor which is manufactured by Samsung using intellectual property (IP) from Apple.

Other components in the iPhone 4 include:

• A capacitive touch screen with reinforced glass, $10.00.
• A 5-megapixel main camera with autofocus, $9.75.
• A WiFi Bluetooth controller IC from Broadcom Corp., priced at $7.80.
• A $5.80 battery.
• NOR flash from Intel Corp./Numonyx; and DDR mobile DRAM, from Elpida Memory Inc., at a combined cost of $2.70.
• A $2.60 Microelectromechanical (MEMS) gyroscope from STMicroelectronics.
• A quad-band GSM/Edge transceiver from Infineon, $2.33.
• A $2.03 main power-management IC from Dialog Semiconductor.
• A Global Positioning System (GPS) chip, also from Broadcom, priced at $1.75.
• Texas Instruments Inc.'s touch screen controller IC, costing $1.23.
• A $1.15 audio codec from Cirrus Logic.
• An e-compass provided by AKM Semiconductor Inc., 70 cents.
• An accelerometer supplied by STMicroelectronics, 65 cents.