Apple TV Teardown Reveals $64 Manufacturing Cost

The redesigned Apple TV cost $64 to make and its internal design and key components are almost exactly the same as Apple's iPad, iPhone 4, and iPod Touch, a teardown analysis showed.

The recently released, second-generation device for streaming video, music, and video over a Wi-Fi connection to a flat-panel TV is a dramatic departure from the previous product, which was built like a mini-computer, iSuppli said in releasing its report Tuesday. The current product has the same A4 processor core, Wi-Fi/Bluetooth chip, and power management chip that are the building blocks of the iPad tablet, iPhone 4 smartphone, and iPod Touch media player.

"The first Apple TV was built like a net-top computer. The architecture was basically a stripped down, small-form-factor desktop PC," said Andrew Rassweiler, teardown analyst for iSuppli, said in a statement. "The second generation Apple TV is more like an iPad or iPod Touch with no display."

The new Apple TV carries a bill of materials of $61.98, based on a preliminary estimate by iSuppli. When manufacturing costs are added, the production cost rises to $63.95, which doesn't include research and development, software, licensing, and royalties.

Where Apple sold the first-generation product at a price close to the underlying hardware costs, the latest product, which costs $99, has a significantly improved ratio of hardware cost to retail price. Nevertheless, for Apple, the margin is much less than that for other Apple products, iSuppli said.

The most clever design element with the latest Apple TV is in the handheld remote control, which represents "more incredible mechanical engineering from Apple," Rassweiler said.

"The remote appears to be machined from a solid piece of aluminum," the analyst said. "Because of this, the electronics of the device must be slid in through small holes on the side, similar to putting a ship in a bottle. It's a clever and a detail-oriented piece of design that makes the remote very pricey and very unique to Apple."

As in other recent Apple designs, Samsung Electronics is the marquee component supplier for the Apple TV. Samsung makes the Apple-designed A4 application processor and the chip that holds the device's system memory. Combined, the technology is the most expensive section of the device at a cost of $16.55 or nearly 27% of the bill of materials.

The second most expensive subsystem is the 8 GB of NAND flash used mostly for storing media. Toshiba was the supplier of the $14 subsystem in the unit torn down by iSuppli.

Other vendors supplying Apple TV components include Panasonic, Broadcom, Analogix Semiconductor, Dialog Semiconductor, Texas Instruments, Delta Electronics, and SMSC.