iSuppli: iPhone 4 Costs $187.51 in Materials

Each 16GB iPhone 4 costs Apple $187.51 in materials, according to new estimates from research firm iSuppli. The company announced Monday that even with a new form factor and an expanded feature set, Apple has kept the bill of materials (BOM) for the device comparable to that of the iPhone 3G and iPhone 3GS.

“Just as it did with the iPad, Apple has thrown away the electronics playbook with the iPhone 4, reaching new heights in terms of industrial design, electronics integration and user interface,” Kevin Keller, principal analyst, teardown services, for iSuppli, said in a statement. “However, the BOM of the fourth-generation model 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.”

iSuppli’s estimates are based on internal teardowns of the components that make up the device, coupled with the firm’s estimates on what those components cost in volume. As Apple develops a lot of the technology, materiel, and processes that go into its products, estimating the BOM of a device like the iPhone 4 is as much art as science.

Teardown costs do not include R&D, manufacturing costs, transportation costs, and the myriad of other costs that go into developing, manufacturing, and delivering to market a new product.

Key component costs identified by iSuppli include the cost Apple’s A4 processor at $10.75, $27.00 for 16GB of Flash NAND memory, $11.72 for the cost of the baseband chips, $28.50 for the display, $9.75 for the 5 megapixel auto-focus camera, and $5.80 for the battery.

Key findings of iSuppli’s teardown analysis include the fact that Apple was able to include a much larger battery in the iPhone 4 than in previous versions thanks to both the form factor and component changes.

“The metal housing of the outer enclosure serves as a physical antenna, a tough task to design and manufacture because antennae pieces have to be insulated from other parts, and yet be rigid around the perimeter,” Mr. Keller said. “This adds more complexity and cost, but elegantly uses every possible cubic millimeter of the iPhone for function, and not just form. The tight intertwining of form and function is an area where Apple has always excelled.”

iPhone 4 Exploded View

An exploded view of the iPhone 4 as offered by iSuppli