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Ilse Jurriën : September 21th 2016 - 10:00 CET

What does an iPhone 7 cost to manufacture?


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AppleBOM costs of the iPhone 7 : The bill of materials (BOM) for an iPhone 7 equipped with 32 gigabytes (GB) of NAND flash memory carries $219.80 in bill of materials costs, according to a preliminary estimate from IHS Markit, a world leader in critical information, analytics and solutions. After $5 in basic manufacturing costs are added, Apple’s total cost to manufacture the iPhone 7 rises to $224.80. The unsubsidized price for a 32GB iPhone 7 is $649. IHS Markit has not yet performed a teardown analysis on the larger iPhone 7 Plus. This preliminary estimated total is $36.89 higher than the final analysis of the iPhone 6S published by IHS in December 2015.
iPhone 7 costs

iPhone 7 is more expensive to produce
“Total BOM costs for the iPhone 7 are more in line with what we have seen in teardowns of recent flagship phones from Apple’s main competitor, Samsung, in that the costs are higher than in previous iPhone teardown analyses,” said Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit. “All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past.”

Design improvements
While the overall shape and physical design of the iPhone 7 is similar to the iPhone 6S that preceded it, the new display has wider color gamut, including DCI-P3 as well as traditional sRGB, which improves the rendering of photos and videos. The device’s haptic engine, which provides the “click” feel for users, has also been improved for longer-duty cycles and better dynamic response. The home button is now static and mimics the MacBook in terms of a solid-state button design. Apple has also eliminated the 3.5 millimeter headphone jack, allowing a larger battery and haptic motor. “Where there was an audio jack in the previous design, Apple replaced it with a symmetrical grill - not for speakers, but for the waterproof microphone, leaving more room for the larger battery and Taptic Engine,” Rassweiler said.

iPhone 7 BOM

More memory = higher costs
Apple has increased the iPhone 7’s storage density. For the first time, the base model starts at 32 gigabytes (GB) - which is only the second time Apple has upgraded the base storage in the iPhone. From a cost perspective, the shift from 16GB/64GB/128GB iPhones to 32GB/128GB/256GB is a big jump. “Despite significant cost erosion in NAND flash over the last year, this increase in the overall memory cost definitely puts pressure on the bill of materials costs - and therefore margins - from Apple’s perspective,” Rassweiler said.




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