iPhone 3G dissection shows total cost of materials to be $174.33

“The total cost of materials used inside the latest iPhone [8GB] is $174.33, a dollar and change higher than the preliminary estimate iSuppli made in June, about two weeks before the phone was actually released. If the analysis is correct, Apple is spending about $53 less on materials than it did with the first iPhone, which iSuppli says costs $227 to make,” Arik Hesseldahl reports for BusinessWeek. “After accounting for a subsidy from AT&T, iSuppli reckons Apple makes a per-unit gross profit of 55%.”

MacDailyNews Note: iSuppli estimated only the total cost of materials and does not factor in R&D, assembly, marketing, packaging, and other costs associated with Apple’s iPhone.

“Many of the companies supplying parts for the latest iPhone have remained the same, iSuppli found. German chipmaker Infineon appears to have been a big winner, however, supplying parts that power some of the new features in the second version of the handset. Infineon supplied both the 3G wireless chipsets—the chips that allow the phone to work with fast wireless data networks—and the chips that enable navigation via global positioning system satellites,” Hesseldahl reports.

“At the heart of the wireless chipsets are two cores—the central brain of a chip—that come from ARM Holdings (ARMH.O),” Hesseldahl reports.

More about what’s in the iPhone here.

Eric Savitz reports for Barron’s, “Friedman Billings Ramsey analyst Craig Berger notes that Marvell is supplying the WiFi chips for the phone, as expected, and that Linear Technology is supplying the battery/USB charger, again as expected. He notes that Skyworks provides a power amplifier module, and that Cambridge Silicon Radio ‘is the Bluetooth winner.’ He concurs that Infineon is ‘the biggest winner.'”

Full article here.


  1. $174.33??? So what does this mean? How much research was done? How much marketing? How much are the wages at Apple?

    I have a bicycle for which the materials cost all of $32.80. The thing retails for $486.00. This info about costs means sweet f- all.

  2. You folks miss the point-

    Material costs are recurring costs. They are fixed for each unit made. (packaging costs are also recurring, although not mentioned in the article.)

    R&D;, engineering, marketing, etc. costs are non-recurring. They happen whether Apple sells 1, 100, 1000, or 1,000,000 units. (OK, so marketing, particularly advertising, may be something of a function of units sold.)

    BOTH are important in divining how much Apple is making on ALL the iPhones sold.

    It’s just Business 101.

  3. A weird question but when I visit MDN on my iPhone there is a red link at the top just under the date, time stock header that says “Visit mobile MacDailyNews.com”. I click it but it just takes me to the page I’m reading. Why or what is the link really suppose to do?

  4. I have an uncle who know someone divorcing Zsa Zsa Gabor, he was ordered to give her the Rolls Royce as one of the items in the divorce settlement.

    So he delivered it to her. On her lawn.




  5. In other news, Intel just announced their Centrino 2 (Montevina) platform which incorporates a faster Penryn Core 2 Duo processor, faster bus speed, faster integrated graphics (GMA X4500) and the option of WiMax support.

    (silverwarloc – ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
    and Digits McGee – I think it was from Godspell, “Day Bidet”?)

  6. “MacDailyNews Note: iSuppli estimated only the total cost of materials and does not factor in R&D;, assembly, marketing, packaging, and other costs associated with Apple’s iPhone.”

    R&D;and Marketing are expensed, as incurred, in other areas of Apple’s financials. Packaging and assembly are proper COGS (Cost of Goods Sold) items. The only “other” cost that would be meaningful is freight to the customer.

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