Date
21 September 2017
An exploded version of the iPhone 6 showing its key components. It costs US$200 to U$247 to make, including parts and labor. Photo: Fixit.
An exploded version of the iPhone 6 showing its key components. It costs US$200 to U$247 to make, including parts and labor. Photo: Fixit.

Learn how much it costs to make an iPhone 6 and weep

If an iPhone 6 Plus just changed hands at a US$2,580 mark-up on the black market in Hong Kong, someone just paid through the nose.

But wait till you hear how much it costs to make — US$200 to US$247 including parts and labor, US$260 tops for the 128 gigabyte model.

No wonder Apple Inc. is raking it in like it’s going to close tomorrow.

Consider this: iPhone 6 models sell for between US$649 and US$849 without a contract. The iPhone 6 Plus models with the larger display sell for US$749 and US$949 without a contract.

Apple charges US$100 to US$200 more for iPhone models with higher memory capacity but Apple’s cost for the additional memory is about US$47 more for the 128GB versions than for the 16GB versions, according to tech website Re/code.

The result is profit margins that are slightly higher — by about 1 percent — on the 128GB models than on the 16GB models: About 70 percent for the 128GB models, and about 69 percent for the 16GB models.

“They seem to be configured and priced to encourage you to buy the models with the higher memory,” said Andrew Rassweiler, a tech analyst who supervised a teardown of the iPhone 6.

He estimates that Apple is paying a price of about 42 cents per gigabyte on the flash memory, which is supplied by numerous companies, including Micron and SK Hynix.

The margins are in line with more recent iPhone models but higher than the earliest ones.

The gross margin on the iPhone 5, released in 2012, and the iPhone 5s, released last year, were about 69 percent, teardown studies at the time of their release showed.

On the lower-priced iPhone 5c, also released in 2012, the gross margin was closer to 68 percent. By comparison, the gross margin on the very first iPhone, released in 2007, was closer to 55 percent.

The most costly component in both phones is the combined display and touchscreen. The displays come from LG Display and Japan Display, costing US$45 on the iPhone 6 and US$52.50 on the iPhone 6 Plus. The cost for the smaller 4.7-inch model is only four dollars more than the four-inch display used on the iPhone 5s.

– Contact us at [email protected]

RC/RA

EJI Weekly Newsletter

Please click here to unsubscribe