February 22, 2018, 11:08:41 AM


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Author Topic: IHS Component Teardown Of iPhone 5C Shows BOM Of $166/ 16GB $176/32GB  (Read 4534 times)


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IHS recently tore down the iPhone 5C and did an inventory of components as well as estimated manufacturing costs for Apple's new mid-range phone.  The Bill Of Materials (BOM) for the 16GB version came out to $166 with a manufacturing expense of $7 bringing the total cost to $173.  The 32GB model has a combined cost of $183.  What these breakdowns show, in addition to the specific manufacturers of all the components, is the profit that Apple is garnering from the sale of these devices.  With a 'retail' sales price of $549, Apple is able to obtain industry leading levels of profit according to IHS.  In order for the iPhone 5C to attain similar levels of profit margin while coming to the public for resale at below $400, which would qualify it as a mid-range device, BOM would have had to come in at about $130.   What this shows is that Apple is determined not to reduce the quality of the iPhone, even for the slightly lower cost 5C series. 

“Many expected Apple to take an affordable strategy with the iPhone 5c, producing a lower-cost smartphone that would be priced at around $400 in order to address developing markets, such as China,” said Wayne Lam, senior analyst for wireless communications at IHS. “However, the reality of the iPhone 5c is completely different, with Apple offering a phone with a $173 BOM and manufacturing cost, and a $549 price tag—without subsidies. Once again, Apple has stuck to its old tried-and-true formula of optimizing its iPhone hardware gross margins to attain maximum profitability.”

Below is the preliminary BOM teardown analysis done by the IHS experts.  Keep in mind that these costs do not include other Apple incurred costs such as software, licensing, royalties or other expenditures such as marketing.

Just as Apple’s pricing strategy for the 5c is familiar, so are the phone’s electronic content and design.

“The iPhone 5c is basically an iPhone 5 in a plastic disguise,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS. “Just as in the original iPhone 5, the 5c uses an Apple A6 processor, a 4-inch retina display, and low-power Double Data Rate 2 (DDR2) DRAM—among other commonalities. Because of this, the iPhone 5c benefits from the normal cost reductions that typically occur for electronic devices during the period of a year. The combination of the design and component reuse—and the plastic enclosure—has allowed Apple to offer a less expensive version of the iPhone, although it’s still not cheap enough to be a true low-cost smartphone.”

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