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iPhone 5 Costs $207 to Build

Apple's new iPhone 5 has a bill of materials (BOM) totaling $199 for the low-end 16 GB model, according to researcher IHS.

The device also has an $8 manufacturing cost per unit, so the total cost to produce the iPhone 5 is $207, the researcher reported. The 64 GB model costs an estimated $230.

The estimated costs are based on a "virtual teardown" of the device, according to IHS. The estimate accounts for hardware and manufacturing costs, and does not include other expenses such as software, licensing, royalties, or other expenditures.

“The iPhone 5’s components are expected to be slightly more expensive compared to the iPhone 4S model,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. He noted the low-end iPhone 4S, which had the same amount of memory as the base-model iPhone 5, carried a BOM of $188.

While the price of NAND flash has fallen during the past year, the iPhone 5’s overall BOM has increased mainly because its display and wireless subsystems are more expensive compared to the iPhone 4S, Rassweiler noted.

The most expensive subsystem in the iPhone 5 is the display, which has integrated, in-cell touch sensing. At $44, this subsystem is pricier than the combined total of $37 for the iPhone 4S display with separate touchscreen, based on pricing from October 2011.

The cost is higher because the iPhone 5’s display is larger. It measures 4 inches compared to the 3.5-inch screen in the iPhone 4S, IHS reported.

The iPhone 5 makes a "big evolutionary step in technology" with the use of in-cell touch sensing, according to Rassweiler. “Most other smartphones' LCDs use a completely distinct capacitive touchscreen assembly that is physically separate and placed on top of the display."

The iPhone 5 partially integrates the touch layers into the display glass, making the product thinner and reducing the number of parts required to build the display, said Rassweiler. The screen senses touch without the need for a separate capacitive touch layer.

Equipped with high-speed 4G LTE technology, the iPhone 5 is estimated to have increased the cost of the wireless section of the iPhone 5 to $34, compared to about $24 for the iPhone 4S.

The iPhone 5 is also expected to use a similar LTE wireless subsystem found in the iPad 3. The iPad 3’s wireless section is based on Qualcomm first-generation MDM9600 baseband processor and its RTR8600 RF transceiver.

Apple is expected to equip the iPhone 5 with Qualcomm’s second-generation MDM9615 baseband processor, which is made with a more advanced semiconductor manufacturing technology, reducing power consumption.

Another major upgrade of the iPhone 5 is the use of the A6 processor, compared to the A5 in the iPhone 4S. The A6 is estimated to cost $17.50, compared to $15 for the A5.

The 16 GB of NAND flash in the iPhone 5 is estimated to cost $10.40, down dramatically from $19.20, according to IHS.

The cost of NAND flash continues to fall as manufacturing processes for flash become more advanced. "And because it is the world's largest buyer of NAND flash, Apple gets preferential pricing. Apple’s massive leverage in this market is reflected in our price estimate,” said Rassweiler.