Next-gen iPhone could cost Apple $170

The figures are based on estimates of handsets using 16 Gbytes memory. Costs could go up to as much as $250 for a 64 Gbyte model.

Market watchers claim smartphones based on Google's Android software are competing successfully with today's iPhone, offering features Apple is expected to adopt in its next generation handset. In this environment, "Apple may be forced to level the playing field at a higher cost," said Jeffrey Brown, senior analyst with UBM TechInsights.

UBM TechInsights is part of United Business Media, the publisher of EE Times.

Brown and colleague David Carey estimated the A4 processor believed to be in the next iPhone costs Apple $16, about $3 more than the applications processor in the current iPhone 3GS. Pictures hit the Internet recently showing an A4 chip on what was claimed to be a next-gen iPhone module.

The biggest added cost in the new iPhone—about $9--comes from an upgraded display, reportedly 3.5-inch LCD with a 720x480 pixel resolution. Several sources have speculated Apple will name the handset the iPhone HD for its support of 720-progressive video.

A 5 Mpixel autofocus camera and a video camera would add $4 and $2 to the cost of the iPhone respectively.

"If the screen resolution is wrong and the casing not so fancy as assumed you could lop off $20 or so, but frankly much of the cost estimate depends on what you assume for Apple's costs for NAND flash," said Carey.

Flash prices are very volatile, and it's difficult to know exactly what volume prices Apple has been able to negotiate, said Carey. He estimated the cost of the next-gen iPhone enclosure at $20, assuming it uses a mix of high quality ceramics and metals. He pegged the display cost at about $25.