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9/24/2013
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$649 iPhone 5s Costs Apple $199

Teardown data from IHS shows Apple spends similar amounts to manufacture iPhone 5s and 5c.

Apple iOS 7: Visual Tour
Apple iOS 7: Visual Tour
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[ Editor's note: This story has been updated to clarify total cost issues. ]

The new iPhone 5s costs Apple about the same to build as last year's iPhone 5, according to a report from IHS. The company has torn down both the iPhone 5s and 5c, and assessed where the internals came from and what they cost.

The bill of materials for the 16-GB iPhone 5s comes to about $191. The device costs about $8 to manufacture, bringing the total to $199. The 64-GB model costs Apple only $19 more to make, for a total of $218. The full retail price of the 16-GB 5s is $649, while the 64-GB 5s goes for $849.

The 5c costs just a little bit less to make. IHS, which shared the results of its breakdown exclusively with AllThingsD, says the components and manufacturing cost for the 16-GB 5c add up $173, while the 32-GB 5c costs $183. The iPhone 5c sells for $549 and $649, respectively, for the 16- and 32-GB models.

It's important to remember that the cost to manufacture the iPhone doesn't include other, often significant costs, such as research, marketing, and so on. IHS' analysis only pertains to the individual components and their assembly. Apple doesn't disclose those costs, so they can only be estimated.

[ Take a closer look at Apple's new smartphones. See iPhone 5c, 5s: 10 Smart Design Choices. ]

As is typical, the display costs the most on both the 5s and 5c, which are using the exact same panel. IHS estimates the cost of the LCD screen to be $41. A range of companies are making the display, including Japan Display, LG Display and Sharp.

Both devices use the same combined RF chip, as well, which costs a hefty $32. According to IHS, Apple is using a fairly advanced RF chip that handles up to 13 different LTE bands. "Unlike other phone designers, Apple has spent a lot of time collaborating with the RF chip companies to find novel solutions that its competitors don't have," said IHS analyst Andrew Rassweiler. Apple generally tries to manufacture as few SKUs as possible. Combining so many LTE bands onto a single radio chip really helps cut down the number of unique devices Apple has to make. The RF modules come from Avago, Qualcomm, RF Micro Devices, Skyworks and TriQuint Semiconductor.

The major differences between the 5s and 5c boil down to a few components. The 5s includes the Apple A7 processor, which is made by Samsung. Due to the 64-bit computing power of the processor, Apple chose a different type of RAM for the 5s. The A7 processor costs $19. The 5c uses Apple's A6 processor. It is also made by Samsung and costs about $13. Both were designed by Apple.

Wondering about the fingerprint sensor in the iPhone 5s? That only adds $7 to the phone's cost. The 5c doesn't have a fingerprint scanner. IHS didn't provide a detailed breakdown on the differences in cost between the aluminum 5s and the polycarbonate 5c shells.

By way of comparison, the Samsung Galaxy S4 smartphone costs $237 to build. The GS4's priciest component is the 5-inch full HD touch display, which costs a hefty $75 -- almost twice what the iPhone's screen costs. Further, the GS4's processor, which Samsung built for itself, costs $28. Samsung spent more than $100 on just two components for the GS4. The same two components cost Apple $60 for the iPhone 5s.

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Ian Page
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Ian Page,
User Rank: Apprentice
9/24/2013 | 6:57:35 PM
re: $649 iPhone 5s Costs Apple $199
This analysis wilfully perpetuates the myth that the cost of parts and manufacture are the only costs involved in producing the iPhone. Hmm - I guess that would be the case if we all bought our iPhones without an operating system, or apps, or servers, or support, or warranty, or shipping (from China!), or cables, or charger, or, or or or....

AND in addition, Apple could be a zero-overheads corporation operated by slaves with non-existent systems. (Unless of course the shareholders could be convinced to run Apple at at a permanent loss...)
JoshuaS993
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JoshuaS993,
User Rank: Apprentice
9/24/2013 | 6:58:27 PM
re: $649 iPhone 5s Costs Apple $199
Delete - duplicate
JoshuaS993
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JoshuaS993,
User Rank: Apprentice
9/24/2013 | 7:00:27 PM
re: $649 iPhone 5s Costs Apple $199
The article should be titled "$649 iPhone 5s Costs Apple $199 to manufacture." By including the line "It's a shame Apple is only marking the price up by (a minimum of) 326%." you show how biased you are. The cost to manufacture the phone doesn't include any of the other costs such as R&D and marketing - which are significant. To not even mention these shows that you are merely looking for clicks, and couldn't care less about accurate journalism. Apple's gross margins are around 30-35% over recent quarters. They'd love your math to be the reality - but it simply isn't.
TelsaI845
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TelsaI845,
User Rank: Apprentice
9/24/2013 | 7:27:53 PM
re: $649 iPhone 5s Costs Apple $199
Only 3 times? No way. A wild guess would put the cost at under a $100 or less. That would put the markup at a more realistic 6 and 8 times the cost, 10 times the cost would be more like it.
ANON1252009151911
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ANON1252009151911,
User Rank: Apprentice
9/24/2013 | 7:29:44 PM
re: $649 iPhone 5s Costs Apple $199
It's 4.25x the manufacturing cost. People are fools.
ANON1252009151911
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ANON1252009151911,
User Rank: Apprentice
9/24/2013 | 7:30:55 PM
re: $649 iPhone 5s Costs Apple $199
Each 64GB version sold could pay for both the manufacture AND purchase of a new 16GB. I sincerely doubt that profit margin is due to overhead.
ANON1252009151911
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ANON1252009151911,
User Rank: Apprentice
9/24/2013 | 7:33:56 PM
re: $649 iPhone 5s Costs Apple $199
People will twist themselves into knots to justify Apple's prices. Seriously, what makes Apple so special that they have an outsized margin, yet they're the largest company on the planet? Talk about math, this just doesn't add up.
Ian Page
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Ian Page,
User Rank: Apprentice
9/24/2013 | 7:40:11 PM
re: $649 iPhone 5s Costs Apple $199
Why in heaven's name do you think your "wild guess" is more credible than the detailed breakdown and costing presented here by people who know what they're doing, and obviously do it a lot?
Frank_Truth
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Frank_Truth,
User Rank: Apprentice
9/24/2013 | 7:45:07 PM
re: $649 iPhone 5s Costs Apple $199
The bottom line is this. I wouldn't care if the Apple phone cost $0.00 to manufacture. The sad fact here is Apple has refused to use its windfall profits from the iPhone to make it better, and deliver more value. Instead Apple has chose to buy back their stock. Shareholders would have been better served if Apple used their cash to make the iPhone a better product. There are so many things Apple could easily have improved. And iOS7 is a clownish design was design for bubblegum-chewing, unicorn-loving little girls, not a classy, elegant design for executives.

Actually iOS7 looks like it was designed by a male hairdresser using MS Paint for flaming queens, and Prince. Can't look at iOS 7 and not think of Raspberry Beret or the psychedelic 60's.

Look at the new camera icon and the old camera icon.

There are B&W icons, lots of icons with white backgrounds, then lots of icons with green backgrounds.

Apple chose a font with thin, hard to read characters on a phone that is already smallest in the smart phone universe.

The new flat design looks like Apple is following Android and Windows 8 tiles. The real world is 3-D. The engineers who designed the new interface think in abstract symbols not 3-D images.

Steve Job's skeuomorphism was classy, not cheesy or cheap. There is reason expensive watches are analog, not digital.

Finally, Apple should have come out with two different size phone for people who have different size hands. A adult male has much larger hands than a female tween. One size does not fit all. iPhone owners are leaving Apple in droves permanently because they want a bigger phone, even though there are many Apple customers perfectly happy with the phone size the way it is.

Samsung makes many different size phones. Moreover, the IPhone has fallen behind in many important areas. The Sony phone is more water resistant. The Lumina has a much better camera. The Motorola Droid Maxx has much better battery life even though it has a much bigger screen, and it is more durable.

There are still areas where the iPhone is ahead of its competition, but those areas are shrinking as Apple has been too slow in improving the iPhone.

The iPhone should have NFC (Near field Communication), a consumer replaceable battery, and consumer upgradeable memory.

Some one wrote me consumers can replace the battery on their own, if they take a special course in cell phone repair, and buy special tools. This is the kind of insane nitpicking people have with my messages.

I am an iPhone owner, and have always appreciated Apple's products. But it looks to me like Apple is lost. They should not have fired Scott Forestall. Apple is being run by a supply chain guy, not a visionary who understands what consumers want, and it shows.

Don't be fooled by the fact the Apple 5s sold so many units and sold out so fast. Apple is still coasting. Apple still has a lot of momentum from the iPhone 4. But eventually the Apple will fall back down to Earth like Blackberry, AOL, Nokia, and Motorola.

Gizmodo showed the 5 takes better pictures than the 5s even though the 5s has better specs. Gizmodo proved this by taking identical photographs with the 5 and 5s. Fair Trade showed the 5s is more likely to stop working after a fall. And Consumer Reports showed the iPhone in general has poorer phone call reception than most smart phones.
Frank_Truth
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Frank_Truth,
User Rank: Apprentice
9/24/2013 | 7:56:02 PM
re: $649 iPhone 5s Costs Apple $199
Sadly, Apple does not spend that much for R&D anymore. Other companies like Microsoft and Google spend over 10% of their profits for R&D. Apple spends virtually nothing. They are now content to milk their existing consumer base.
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