The 16 GB iPhone 5 Costs Apple $207 to Build

The 16 GB iPhone 5 costs Apple slightly more to build than it retails for with a two-year contract, according to a new report from IHS iSuppli.

The market research firm conducted a virtual teardown of the latest iPhone and estimates that the parts used in the 16 GB version cost Apple $199 while the manufacturing cost is another $8, meaning Apple pays about $207 to build the entry-level iPhone 5.

Not only is that more expensive than the phone’s $199 price tag with a two-year contract, it’s also more than the iPhone 4S was estimated to cost Apple to build. A previous report from iSuppli found that the materials used in the 16 GB version of the iPhone 4s cost Apple $188.

The two biggest factors driving up the cost of the latest iPhone are 4G LTE and the new in-cell touchscreen technology that essentially eliminates a layer from the display to make the smartphone that much thinner. The use of 4G LTE is estimated to cost Apple $34 per device, up from $24 per device for the wireless component costs in the iPhone 4s. Likewise, the in-cell technology increased Apple’s display costs to $44 for each iPhone 5 compared to $37 for each iPhone 4s.

Apple was able to offset some of this by bringing the cost of other parts down, including the price of NAND Flash, which is estimated to have been almost halved from the previous year to $10.40.

As iSuppli points out, these estimates only factor in the cost of hardware parts and manufacturing, but omit the cost of research and development, licensing fees and royalties, among others, so the overall price tag for Apple could be higher.

Even if the phone does cost more $207 or more to build, it’s worth noting that the actual starting price of the iPhone 5 is $649 — that cost gets subsidized by the wireless companies with your contract — so Apple still has a huge profit margin here.

Here’s the full breakdown of what it costs to make each version of the iPhone 5 from iSuppli:

Read more: http://mashable.com/2012/09/19/iphone-5-manufacturing-cost/

The 16 GB iPhone 5 Costs Apple $207 to Build