BOM for iPhone 4 is $188, says iSuppli

SAN FRANCISCO—The 16-Gbyte version of Apple Inc.'s iPhone 4 carries a bill of materials (BOM) cost of $187.51, keeping with Apple's strategy of maintaining hefty profit margins on the popular smartphone, according to a teardown analysis conducted by market research firm iSuppli Corp.

A number of firms, including UBM TechInsights (owned by the same parent company as EE Times) have conducted teardown analyses of the iPhone since its release on June 24. The teardowns have revealed that Apple is using many of the same parts in iPhone 4 that it uses in its iPad tablet.

ISuppli (El Segundo, Calif.) estimated the BOM of the 3GS in 2009 at $170.80; the 3G in 2008 at $166.31 and the first iPhone in 2007 at $217.73. ISuppli noted that the BOM accounts only for hardware costs and does not include other expenses such as manufacturing, software, marketing, distribution and royalties and licensing fees. Kevin Keller, a principal analyst for iSuppli's teardown services, said the BOM of the iPhone 4 closely aligns with those of previous iPhones. "With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve—one whose size is exceeded only by Microsoft Corp," Keller said.

The 16-Gbyte iPhone 4 sells for $199 plus shipping on Apple's website.

In its teardown analysis, iSuppli noted that the body of the iPhone 4 incorporates the phone's antenna. ISuppli praised the re-designed housing as innovative, but some analysts have speculated that the integrated antenna could be the cause of reception issues that some users have experienced.

The wireless subsection of the iPhone 4 is smaller than in previous iPhones because of increased integration of the RF functionality into the core chipset components, despite the presence of an additional air standard: High-Speed Uplink Packet Access, iSuppli said.

"Out of the nearly 300 cell phones torn down by iSuppli, the iPhone comes the closest to integrating the entire wireless interface—including all the supporting radio frequency modules—on a single chip," Keller said.

The LCD display represents the single most expensive component in the iPhone 4, costing $28.50 and accounting for 15.2 percent of the product’s total BOM, iSuppli said. The 3.5-inch display uses advanced low-temperature polysilicon and in-plane switching technology and features a 960 by 630 resolution—four times that of the iPhone 3GS.

While the display is not labeled, iSuppli believes the most likely supplier is LG Display, the firm said, but added that Toshiba Mobile Display is also a possibility.

The next most expensive single component of the iPhone 4 is the NAND flash memory, iSuppli said. In the 16-Gbyte version of the iPhone 4, the NAND costs $27 and accounts for 14.4 percent of the BOM, according to iSuppli. In the iPhone 4 torn down by iSuppli, the NAND flash was supplied by Samsung Electronics Co. Ltd., although Apple could be employing other sources as well, iSuppli said.

Samsung also supplies the next costliest part, the 4 Gbits of mobile double data rate SDRAM, priced at $13.80, or 7.4 percent of the BOM, iSuppli said.

To see the complete results of iSuppli's preliminary teardown estimate for iPhone 4, click here.