In total, Amazon's new E-Book Reader carries $185.49 in materials and manufacturing costs, according to iSuppli Corp. When adding the manufacturing expenses and the battery, the total rises by $8.66 to $185.49. The combined manufacturing and materials costs represent 51 percent of the Kindle 2's $359 retail price, according to the research firm.

ISuppli estimates that $60, or 41.5 percent of the materials cost of the Kindle 2, is accounted for by E Ink Corp.'s display module, according to the firm.

The next largest cost driver in the Kindle 2 is the wireless broadband module, provided by Novatel Wireless Inc. Priced at $39.50, the module supports the CDMA2000 1X EV-DO Rev A air standard. The module includes Qualcomm Inc.'s MSM6801A single-chip baseband processor, which is priced at $13.18, iSuppli estimates.

The Kindle 2 also includes Freescale Semiconductor Inc.'s MCIMX31LVKN5C multimedia application processor, priced at $8.64. The Freescale processor is based on an ARM11 microcontroller core, which runs at a clock speed of 532-MHz. Freescale also contributed its MC13783VK5 audio circuit and power-management IC.

Samsung Electronics Co. Ltd. provides the flash memory. ''The showcase feature of the Kindle is its E-Ink display, which not only is easy on the eyes, but also employs electrophoretic bistable technology that allows it to show an image even when it's not drawing power,'' said Andrew Rassweiler, an analyst for iSuppli, in a statement.

''The new version of the E Ink display in the Kindle 2 supports 16-level grayscale images, rather than the 4-level version used in the previous-generation hardware. This makes the Kindle 2's display look like a printed page,'' he added.

Rassweiler noted that the bistable display for the Kindle 2 obtained by iSuppli continues to display the warning message "Critical Battery" even after the product was completely dissembled for the teardown. With no power or electronic control to refresh the image, the display will be frozen in this state forever.