iPhone 6s: How Much Does It Cost Apple to Make?

iPhone 6s display with 3D Touch

Source: Apple.com

We’ve reached the part of the marathon new-iPhone news cycle in which tech bloggers post in-depth reviews of the new device, analysts speculate about how important it is that this year’s launch weekend was bigger than last year’s, YouTube stars drop iPhones off roofs or into swimming pools to test their durability, and research firms complete “teardowns” to pull apart the new device and take a closer look at what’s inside. While each kind of news item yields some useful insights, one of the more interesting is the teardown’s ability to reveal what it costs Apple to make each model of its new iPhone.

Dawn Chmielewski reports for Re/Code that a teardown analysis conducted by IHS Technology concluded that the iPhone 6s Plus costs Apple an estimated $236 to make and assemble, roughly a third of the $749 retail price it asks for the new smartphone. Though IHS didn’t have the time to conduct a similar teardown of the iPhone 6s, the firm estimates that the cost of its materials and assembly is $211.50, about $20 less than the bigger iPhone 6s Plus.

The firm arrived at its estimates by taking apart Apple’s iPhone 6s Plus to get a closer look at its internal components, and analyze the likely cost of the materials and manufacturing. IHS senior research director Andrew Rassweiler told Re/Code that the teardown analysis has its limitations, since the analysis doesn’t take into account other costs associating with sales of the new iPhones, including shipping, warehousing, research and development, and even marketing. But the teardown does provide some insight into what’s likely the biggest single cost associated with the iPhone 6s.

A teardown also traditionally reveals indications of Apple’s priorities with each new generation of its iPhone. The iPhone 6s and the iPhone 6s Plus are sturdier than their predecessors, with a more robust 7000-series aluminum casing, a more shatter-resistant Gorilla Glass 4 cover, and gaskets that seem to make the device more water-resistant. (Though, as The Cheat Sheet recently noted, that or the myriad YouTube videos of iPhone 6s “water tests” are not a reason to assume that your new iPhone is “secretly waterproof,” as some outlets are claiming.)

The upgrades suggest that Apple is making the iPhone more resilient against everyday life’s inevitable bumps and bruises, and Chmielewski notes that that move could make the phones retain their value longer — which could be important in light of the growing opportunity for leasing deals that would create a robust market for used devices. Apple itself, for the first time, is offering the iPhone Upgrade Program, which enables users to pay a fixed, no-interest monthly fee for a new iPhone, which they can trade in each year for the next generation of the device.

The IHS teardown also revealed that Apple is incorporating radio frequency components that enable the device to be used on a variety of carrier networks around the world, which makes it easier for Apple to roll out the iPhone 6s and the iPhone 6s Plus worldwide without making a specific model for each carrier. That should save some significant time, and prevent the issues that arise with managing the inventory of a wide assortment of different models for different markets.

The firm also reports that Apple’s choice to integrate a new 12 megapixel camera both differentiates this year’s iPhone from last year’s model and its 8 megapixel camera, and offers a compelling reason for more consumers to buy iPhones with larger amounts of memory. IHS estimates that flash memory is cheap — about 35 cents per gigabyte — so Apple profits significantly by convincing consumers to upgrade from the 16GB base model to the 64GB model. That upgrade costs Apple just $17 more in component costs, but consumers pay an additional $100 for the extra storage.

Other components inspected by IHS also cost less than what you might imagine based on Apple’s marketing. The 3D Touch display, which enables the iPhone 6s and iPhone 6s Plus to detect the pressure applied to the touchscreen, costs Apple just $52.50. IHS thinks that Apple has added a new layer to the screens to do the pressure detection, which in combination with the electronics needed to support the feature, adds approximately $10 to the cost of the screen. The A9 processor, another component that’s central to the iPhone 6s’s position as a significant upgrade from the iPhone 6, costs Apple roughly $22.

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