After the successful launch of the latest iPhone 6, Apple Inc (NASDAQ:AAPL) touched 10 million-mark for its latest version of the device. A teardown analysis of iPhone 6 shows that Apple Inc spends between $200 and $247 in parts and assembly of the device.
The teardown analysis from IHS indicates a total cost of $216 for the starting model of iPhone 6 Plus and it goes up to $263 for the higher 128 gigabyte model. Apple Inc (NASDAQ:AAPL) spends somewhere in between $4 to $4.50 in labor costs. The average price of iPhone 6 without the contract goes around $649 to $849 whereas the iPhone 6 Plus costs around $749 and $949 in the market.
Apple Inc (NASDAQ:AAPL) charges $100 higher for its large memory devices, 128 GB, as compared to the smaller ones, 16GB, which puts profit margins for 128GB devices at 70% whereas 69% for the lower memory devices. An IHS analyst, Andrew Rassweiler, said, “They seem to be configured and priced to encourage you to buy the models with the higher memory.” The profit margins for iPhone 6 are somewhat similar to iPhone 5 and iPhone 5S models but much higher than the relative profit of the earlier versions. The first generation of iPhone released in 2007 offered gross margins near to 55%.
Apple spends most on its touchscreen and display at $45 for iPhone 6 and $52.50 for iPhone 6 Plus. The company uses Gorilla Glass, made by Corning, for display protection unlike the much-anticipated Sapphire screen. The processor for iPhone 6, A8 processor, comes from Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) and Samsung Electronics Co Ltd (KRX:005930), where TSM produces 60% and Samsung manufactures 40% of the desired amount.
However, NXP Semiconductors NV (NASDAQ:NXPI) is behind the most exclusive feature of iPhone 6 i.e. Apple’s own payment portal. Apple Inc (NASDAQ:AAPL) gets its Near Field Communication (NFC) hardware from NXP.
This article has been written by Prakash Pandey.