iSuppli Sees 55% Gross Margin For Apple On 8 GB iPhone

The research firm iSuppli asserted Tuesday that Apple (AAPL) generates a 55% gross margin on the 8 GB iPhone, with materials and manufacturing costs of $265.83 on each $599 phone. Those costs do not include royalties and logistics expenses, so the actual margin is likely to be somewhat lower.

The firm said that Infineon (IFX) contributed $15.25 worth of parts, including the digital baseband, radio-frequency transceiver and power-management devices, “providing much of the core communications capability” in the iPhone.

National Semiconductor’s (NSM) contribution is “relatively small,” iSuppli said, providing the serial display interface, which costs about $1.50. Still, iSuppli said it was “an important design win for National, which has never had a part in an iPod.” According to iSuppli, the chip uses National’s Mobile Pixel Link standard “which the company has been attempting to promote for use in mobile devices.

TPK Holding of China made the display module, a part with an estimated cost of $27.

The touch-screen display comes from multiple sources, including Epson, Sharp (SHCAY.PK), Toshiba (TOSBF.PK) and Matsushita (MC). The screen cost is estimated at $24.50.

Samsung produces the ARM processor in the iPhone, with a cost estimated at $14.25, as well as NAND flash memory and DRAM. There is $24 worth of NAND in the 4 GB version, $48 worth in the 8 GB version. The cost of the SDRAM chip in the phone is $14. In total, Samsung has $76.25 worth of chips in the 8 GB phone, or about 30.5% of the hardware cost.

Other companies with parts in the phone include Wolfson, which makes the audio codec; CSR, which makes the Bluetooth chips; and Marvell (MRVL), which produces the WiFi baseband chip.

Looking ahead, iSuppli forecasts iPhone shipments of 4.5 million units this year, and 30 million by 2011.

Comments

[wayne thompson:]

I do not believe people are writing about this I am not getting the iphone but I do know that the parts are a small part of the cost in making a product r&d and Marketing are major player and just a few of the cost. With all the new phones being introduced I have not seen anyone pull a product apart in so many ways. Some people must really hate apple and the iphone

2007 Jul 04 09:13 AM

[Alan Williams:]

I doubt Apple has spent much money on marketing. The world wide media, in it's every form, is doing their marketing for them. Every friend, family member and business contact of mine, that knows I use Macs, has asked me about iPhone.

R&D is another matter. Apple worked on the iPhone for 3 years. It's fair to say that most of their R&D budget for the last 2 years was spent, directly and indirectly, on the iPhone.

Apple won't really be making any money on the iPhone until well into 2008. Why no one, in their cost estimates, mentions R&D costs is beyond me. Are they trying to make the iPhone look overpriced?

2007 Jul 04 12:17 PM

[wayne thompson:]

I have worked for control data. Memorex, IBM and Apple who ever is writing these articles are only listening to hear say and have no idea of how much it takes to bring a product to market.

2007 Jul 04 12:35 PM

[Camden:]

For Alan, re: "Why no one, in their cost estimates, mentions R&D costs is beyond me. Are they trying to make the iPhone look overpriced?"

No one knows what figure to use for R&D by product – Apple doesn't break it out. It would only be a wild guess. Who knows what Apple is working on now? We DO know (from the recent 10Ks and Q1 CC) that R&D costs have remained very flat and have been trending down as a % of revenue.

2007 Jul 04 09:02 PM

[Jon T:]

There is definitely an element of trying to tell the world they are paying too much. The likes of Gartner have a full time job containing the Apple success story...

2007 Jul 05 06:09 AM