Tuesday, October 25, 2016

iPhone 7 Estimated To Cost $220 To Build, Sells For $649

A new research report outlines Apple’s costs to manufacture the iPhone 7, suggesting that they have risen compared to last year’s iPhone 6s.

The production of an iPhone 7 may cost more than previous devices to build, and may be passed onto the consumer at the same price, but worry not, as the Cupertino-based company is still leveraging an impressive profit on each device sold. The new report, which takes a 32GB 4.7-inch iPhone 7 and breaks the internal components down into a list format, highlights the total cost of that particular device to Apple as $220.80.


That cost is broken down into $215.80 for direct material costs, and $5.00 for conversion costs, which includes a momentary value against assembly, insertion and testing. From the components listed, the most expensive part of the iPhone 7 is the display and accompanying touchscreen module, which sets Apple back $43.00 per unit.

Apple makes a rather big deal about the A10 Fusion processor that powers the new iPhone 7 hardware. The report suggests that each system-on-chip integrated into an iPhone 7 costs the company $26.90, which gets the company a quad-core 64-bit ARM-based CPU with an accompanying 16nm hexa-core GPU.

This particular iPhone 7 is sold to consumer for $649, which may seem like an extremely impressive margin, but the component breakdown and cost in the report doesn’t represent the total cost that Apple will pay to design, develop and build each iPhone unit.


In addition to the individual component and manufacturing cost of each iPhone, Apple also has to shell out for shipping, any applicable local taxes, marketing costs, and even the cost of packaging in getting the iPhone into its purpose packaging. There’s also the cost of any accessories that are shipped with each iPhone unit, such as the new Lightning-enabled EarPods, Lightning cable, wall charger and any adapters that are provided as part of the experience. Not to forget years of research and development that goes into these products.

We are yet to see information about the manufacturing costs of the larger 5.5-inch iPhone 7 Plus, but taking these costs into consideration, as well as any additional costs that the company may face to actually get the hardware to market, and putting it together with the fact that the iPhone 7 Plus is largely sold out worldwide, we don’t think Apple will be struggling financially any time soon.

For further details, you can download the complete breakdown report from here.

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