BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

iPhone 5 Markup Tops 300%

Following
This article is more than 10 years old.

Apple's (NASDAQ: AAPL) next-generation iPhone is one very expensive device.

In its initial teardown of the iPhone 5's hardware and manufacturing expenses, iSuppli, a division of IHS (NYSE: IHS) -- an information and analytics provider -- discovered that the device carries a bill of materials (BOM) of $199.00 for the low-end 16GB model. That is the exact same price consumers will pay to acquire the phone if they agree to a two-year contract with Sprint (NYSE: S), Verizon (NYSE: VZ), or AT&T (NYSE: T).

(Will AT&T get in trouble for charging for FaceTime over cellular? Click here to find out.)

The aforementioned expense only accounts for the device's hardware. Apple will spend an additional $8 to manufacture each iPhone 5, bringing its total expenditure to $207.00 per unit. Comparatively, iSuppli said that Apple spent $188.00 to produce the 16GB iPhone 4S.

While the cost of flash memory has dropped tremendously, (from $19.20 for 16GB in October 2011 to $10.40 for 16GB in September 2012), iSuppli said that other expenses have increased. For example, Apple now spends $34.00 on the wireless section of the iPhone 5, thanks entirely to the inclusion of 4G LTE technology. Similar (but less advanced) technology used in the iPhone 4S costs $10.00 less.

By switching to a new display with in-cell touch sensing, Apple was expected to reduce its manufacturing expenses. According to iSuppli, the new display costs $44.00 per unit versus $37.00 for the older display technology used in the iPhone 4S.

Apple is also paying more to provide a superior processor. While the A5 added $15.00 to the overall expense of producing the iPhone 4S, the new A6 processor (used in the iPhone 5) costs $17.50.

iSuppli did not break down the individual expenses of the higher-end iPhone models. However, the research firm did reveal that the 32GB version of the iPhone 5 will cost Apple $209.00 to produce, while the 64GB version will cost $230.00.

Consumers can purchase the 16GB version for $199 with a contract; the 32GB and 64GB models sell for $299 and $399, respectively. Those who choose to purchase an iPhone 5 without a contract will pay $649.00 (16GB model), $749 (32GB), or $849.00 (64GB).

Follow me @LouisBedigianBZ