July 5, 2007

iPhone Profits = 55% July 5, 2007

Read more Apple , Gadgets , Gizmodo UK , Mobile Devices , Mobile phones , Smartphones , iPhone

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Market analyst, iSuppli, has been taking perfectly good technology and tearing it apart again. It did the same with the Toshiba HD DVD player and had previously predicted a 50% per cent profit for the iPhone.

However, keep in mind that this is a components-only teardown and does not take into account the hundreds of millions that Apple has forked out in development and advertising.

iSuppli’s teardown said that the 8GB version of the iPhone has a total hardware BoM [Bill of Materials] and manufacturing cost of $265.83. The 8GB iPhone costs $599 to buy, resulting in a margin in excess of 55%. The biggest single winner from the iPhone, apart from Apple, is Samsung. And this is why:

The South Korean electronics giant supplies the iPhone applications processor, which includes an ARM RISC core. The processor costs $14.25 in both versions of the iPhone.

The company also contributed the NAND flash memory and DRAM for the iPhone. In the 4Gbyte version, Samsung has $24 worth of NAND flash, and $48 in the 8GByte version. For both versions, Samsung supplies 1Gbit of Double Data Rate SDRAM worth $14.00.

Samsung has $76.25 worth of semiconductor content in the 8Gbyte version of the iPhone, giving the company a 30.5 percent share of the product's hardware cost—the largest total of any single supplier.

Considering that Apple shifted over 500,000 iPhones in the first few days, it may be recouping those hefty development costs a lot sooner than expected.-Martin Lynch

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