Dissected iPhone 3G Shows $174.33 Cost & Components, Says iSuppli

iSuppli's Teardown Analysis Service on July 11 obtained an iPhone 3G and
commenced a dissection in order to identify component suppliers, as well as to
determine preliminary part and system costs. Per the teardown analysis and
subsequent examinations by analysts, iSuppli has issued a preliminary estimate
of $174.33 for initial production costs for the 8Gbyte iPhone 3G.

At $174.33, the BOM and manufacturing cost of the new iPhone is markedly less
than the $227 that iSuppli estimated for the first-generation, 8Gbyte 2G iPhone
in June 2007. While using a new design, the iPhone 3G really represents a
refinement of the original iPhone 2G, according to iSuppli.

071508_iPhone3G.jpgInfineon AG was the big winner in the key baseband section of the iPhone 3G
torn down by iSuppli, contributing its HSDPA/WCDMA/EDGE
chip that includes dual ARM926 and ARM7
microprocessor cores. Solely-sourced items include Infineon's baseband
solution, RF transceiver and Global Positioning System (GPS)
devices; Samsung Electronics Co. Ltd's applications processor integrated with
Synchronous DRAM (SDRAM); Marvell Technology
Group Ltd.'s WLAN device and Cambridge Silicon Radio's (CSR's) Bluetooth chip.

iSuppli conducted a teardown analysis of one 3G iPhone and will update its

Multi-sourced items include Toshiba Corp.'s 8Gbyte NAND flash memory chip. other
likely sources for this part include Samsung.

Other observations made by
iSuppli's analysis team include:

  • The redesigned internals of
    the iPhone 3G include only one large Printed Circuit Board (PCB), instead
    of the two nested PCBs found in the 2G version. The iPhone 3G uses a
    10-layer board, compared to the less-expensive six-layer PCBs commonly
    employed in mobile handsets.
  • The battery is not soldered into
    the iPhone 3G as it is done in the 2G, making it more serviceable.
  • Some chips have the Apple
    logo or are unmarked. Although iSuppli has been able to identify many of
    these parts and their true manufacturers by de-capping the chips and
    examining their dies, some devices remain unidentifiable at this time.

Beyond the $174.33 BOM and manufacturing cost of the iPhone 3G, Apple is
spending an estimated $50 on IP royalties per unit shipped. With the 8Gbyte
version retail-priced at $199, and the estimated $300 subsidy paid by AT&T
to Apple for each unit, Apple is selling the product at a price of $499, and
spending $224.33 to produce each one. This gives Apple a BOM, manufacturing and
royalty margin of 55 percent for each 8Gbyte iPhone 3G unit sold.