It costs Apple about $200 to make an iPhone 6 smartphone with 16 gigabytes of storage, with the price of materials and manufacturing rising to roughly $216 for the larger iPhone 6 Plus, according to a new teardown of the devices from researcher IHS.
At those costs, Apple should be able to maintain its gross profit margins on its iPhones, which at about 70 percent are among the highest in the smartphone market and are a big part of what makes Apple such a profitable company. Those margins, though, have been sliding in the past few years as the cost of materials has eaten into the profits on each device.
According to the IHS review, the iPhone 6 costs Apple only about $5 more than last year's iPhone 5S model. The 5S initially sold for $649 without a two-year contract, which is what the 6 is going for now. IHS' teardown follows a last week, which uncovered a handful of the components companies, including NXP and Qualcomm, that are involved in the manufacture of the smartphone, which went on sale last week.
It appears Apple should be able to capture even higher margins on the 5.5-inch 6 Plus, which IHS said cost only about $16 more to make but sells at retail for $100 more than the 4.7-inch iPhone 6. Though Apple in the past has looked to goose its profits by offering more memory in higher-end iPhone models, this year it's offering a bigger phone as well.
IHS said it believes Apple made a big shift in component suppliers with the iPhone 6's main processor, the A8. Noting different markings than in past processors, IHS said it thinks Apple is now splitting orders of the chips between Samsung and chip foundry Taiwan Semiconductor Manufacturing Co. Apple previously had used Samsung entirely for these processors, but Apple may have made the switch in response to a series of patent suits between the two tech giants, and as a way to reduce its dependence on Samsung.
An Apple representative didn't immediately respond to a request for comment.
The most expensive part of the new iPhone 6 and 6 Plus is the display and touchscreen, costing $45 to $53, compared with $41 for the iPhone 5S last year. The battery costs about $4 to $5, 16GB of memory costs $15 and the camera costs $11 to $13. Much of the rest of the cost is taken up by computer chips.