iPhone 5c's Plastic Case Saves Apple $42 - InformationWeek

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9/30/2013
09:30 AM
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iPhone 5c's Plastic Case Saves Apple $42

Plastic iPhone 5c is significantly less costly to build than the aluminum iPhone 5s, says UBS.

iPhone 5c, 5s: 10 Smart Design Choices
iPhone 5c, 5s: 10 Smart Design Choices
(click image for larger view)
Another report breaks down the cost to manufacture both the iPhone 5s and iPhone 5c and suggests the difference between the two may be bigger than previously thought.

UBS examined both new iPhones in detail. UBS's data concludes that the 16-GB iPhone 5s costs Apple $213 in materials, but the 16-GB iPhone 5c costs only $156. The total disparity in cost between the two is a gaping $57 in total, $42 of which UBS attributes to the plastic body of the 5c. The 5s is made from aluminum. The other big contributor to the price difference is the 5s' fingerprint sensor, which UBS estimated costs Apple about $7. The remaining $8 in the cost disparity comes from the difference in prices for various other components, including sensors, memory and the processor.

Last week, IHS tore down both models and came up with significantly different numbers. IHS's data suggested the 16-GB iPhone 5s cost Apple $191 in materials, while the 16-GB 5c cost $173 in materials. IHS noted that the biggest cost difference between the two devices was the housing, but came up with different prices. The total disparity between the two manufacturing costs is only $26, according to IHS.

UBS believes the 5s costs Apple $22 more in raw parts than IHS did, but that the 5c costs Apple $17 less than IHS did.

[ Learn how to make Apple's new mobile operating system sing. See 10 Epic iOS 7 Tips. ]

Both UBS and IHS agree (or nearly agree) on the cost of other components, such as the display. IHS pegged the screen's cost for both devices at $41, while UBS says it is $42. Both believe the fingerprint sensor cost $7 for the 5s, and noted a $7 price difference between the A7 processor and the A6 processor.

UBS took things a step further than IHS, however, and calculated gross margins for the devices when all the other cost factors are concerned. (IHS looked only at bill of materials and assembly.) If you throw in the cost of the box, the contents in the box (headphones, charger, cable), manufacturing, shipping and other factors, UBS says gross margins are between 45% and 55% for the 5s and between 48% and 54% for the 5c.

In particular, non-component costs amount to between 33% and 40% of the total cost of each iPhone, due to depreciation and software amortization expenses. Manufacturing and shipping together total between $18 and $20 per device.

Apple hasn't commented on either report.

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