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3/14/2016
01:06 PM
Eric Zeman
Eric Zeman
Commentary
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Galaxy S7 Parts Cost $255, IHS Reveals

Samsung's metal-and-glass Galaxy S7 smartphone costs as much to build as the plastic Galaxy S5 did back in 2014, according to research firm IHS.

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Adding together the price of the individual components shows the Samsung Galaxy S7 costs about $255 in raw parts. That number doesn't account for research, development, shipping, or marketing, but demonstrates how Samsung's supply chain expenses fluctuate year-over-year.

The Galaxy S7 is closely related to last year's Galaxy S6 in that both share a metal frame and glass panels. Inside, the devices are dramatically different. Research firm IHS took the Galaxy S7 apart to determine how much Samsung is spending to make each phone and found some surprises inside.

Typically, the priciest component of any device is the display. That's not the case with the Galaxy S7. Instead, the Qualcomm Snapdragon 820 processor bears the highest price tag, at $62 -- almost one-quarter of the total cost. The 820 is a system-on-a-chip that includes the CPU and GPU, along with a dedicated image signal processor and LTE radio. IHS didn't say if the $62 price includes all these components, or just the processor cores.

(Image: Samsung)

(Image: Samsung)

Samsung used its own Exynos processor for last year's Galaxy S6 handset. Paired together with the baseband radio, the Exynos cost $44.50, significantly less than the Snapdragon 820.

The only other individual part IHS assigned a cost to for the Galaxy S7 is the camera module, which comes in at $13.70. Sony is the most likely manufacturer of the 12-megapixel sensor, though Samsung is making some of the sensors, too. The S7's camera costs significantly less than the $18.50 sensor found in the S6.

The cost of the S7's screen is probably in line with that of the S6's screen, since both have the same measurements and resolution. The display of the S6 was estimated to cost about $55, so we can assume the display of the S7 bears a similar price tag.

Looking at the whole picture, the Galaxy S7 is less expensive to manufacture at $255 than the Galaxy S6 at $275, but is about the same as the Galaxy S5 at $256.

The Galaxy S7 sells for $670, or about $415 more than the cost to build. Samsung spends a lot of cash on marketing, and you can be sure a huge chunk of that $415 is eaten up by advertisements.

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IHS has not yet broken down the cost of the larger Galaxy S7 Edge. Given the bigger phone's dual-curved screen, the display is likely to eclipse the Snapdragon 820 as the costliest single component.

Apple's iPhones, in comparison, cost a bit less to manufacture even though Apple sells them in a similar price range.

The 16-GB iPhone 6s, for example, costs Apple $215 in raw parts, according to IHS's breakdown. The 64-GB model costs a bit more at $234. Apple's A9 processor accounts for $25 of the total price tag. The 2014-era iPhone 6 cost just $206 in parts. Consumers pay Apple $649 for the least-expensive iPhone.

Samsung did not comment on IHS's initial breakdown of Galaxy S7 component costs.

Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio
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jastroff
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jastroff,
User Rank: Ninja
3/14/2016 | 4:41:47 PM
Data
Very interesting data and breakdown. Given the R&D, doesn't seem like they cost more than they should. But does anyone pay full price other than some unlucky consumers? What does an enterprise pay when locked into plans? What's the price for a locked and unlocked unit?

What's the downside of smartphones. They are better than they were, but still fragile, and still limited in many ways. It's unclear if the getting the S7 on the cusp of the S6 makes sense. 

More attention needs to be paid, on the Android side at least, to the every growing amount of bloatware that comes with the unit, and safe apps.
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