Apple Inc. (NASDAQ:AAPL)’s iPhone 6 and 6 Plus sell at premium prices, and they will help Apple maintain its high profit margin. But did you know that the new iPhones cost less than Samsung’s Galaxy S5 to build? Research firm IHS iSuppli has taken apart the new iPhones to figure out costs of components used in new devices.
iPhone 6 base model costs $5 more than 5S
IHS told Re/Code that the base model of 4.7-inch iPhone 6 with 16GB storage costs only $5 more than the iPhone 5S. The 5S was initially priced at $649 without a contract, which is what the iPhone 6 sells for now. The base iPhone 6 model costs $200.10 to build. That means Apple has a whopping 69% gross margin on 16GB iPhone 6.
It doesn’t take into account other expenses such as R&D, marketing, advertising, software, distribution, and more. But it does provide a glimpse into the manufacturing costs of new iPhones. IHS’ teardown comes just days after a similar teardown from iFixit, which revealed that the new devices use components from Qualcomm, Skyworks and NXP Semiconductors.
Apple makes even more money on higher capacity iPhone 6 models
Apple charges $100 more for its 5.5-inch iPhone 6 Plus, though it costs only $15.50 more than its smaller sibling. About half of the difference between manufacturing costs of two models is from bigger display, with the reminder related to a larger battery, rear camera with optical image stabilization and other minor differences. The Cupertino company earns even higher margin on higher capacity models. For instance, the 128GB storage variant of iPhone 6 costs just $47 more than the 16GB model, but it retails for $200 more.
The analysis showed that the iPhone 6 display costs Cupertino $45, while 6 Plus’ screen costs $52.50. Just for comparison, Samsung’s Galaxy S5 with 32GB storage costs the Korean company $252.52 to build. That device currently sells for $599. The Moto X manufacturing costs add up to $226. IHS also revealed that, contrary to past rumors, Samsung is in fact involved in the production of A8 chip. The research firm said TSMC is responsible for 60% of A8 production while Samsung supplies the remaining 40%.