Wednesday, November 06, 2013

iPad Air teardown reveals BOM cost of $247 for the base model along with a pricier display assembly

The house of teardowns, IHS iSuppli, has done its normal teardown analysis of a new device and discovered that the iPad Air costs between $274 and $361 to build, depending on the model. The information was released by AllThingsD, which got an early look at the report.

Looking specifically at the 16GB WiFi-only model, that is actually $42 less than the bill-of-materials (BOM) cost of the entry-level third generation iPad from Q1 2012. Notably, IHS iSuppli did not perform a cost analysis on the fourth-generation iPad, which was released in late 2012.

The cost-cutting came about despite significant technological improvements in the device, both the improve performance and to reduce size and weight.

Some key components involved in the BOM cost are $90 for the display, $43 for the touchscreen components, $18 for the A7 processor chip (manufactured by Samsung), between $9 and $60 for the Toshiba-made flash memory chips -- and looking at that, it's obvious that the higher tier storage iPads are a cash cow for Apple, $10 for the DRAM chips manufactured by Elpida, and $32 for the cellular data network chips made by Qualcomm for LTE-equipped iPad Airs.

That $133 for the display and touchscreen components is a lot more expensive than before, said Andrew Rassweiler, the IHS iSuppli analyst who oversees the company's teardown work. As part of that cost boost, a new type of sensor known as a cyclic-olefin polymer sensor sits underneath the outer layer of Gorilla Glass that users touch.

Formerly, two layers of glass were required. The new system results in less thickness -- 1.8mm vs 2.23mm in the iPad 3 -- and weight.

What used to require two layers of glass, Rassweiler said, now requires only one. As a result, the whole assembly measures out to 1.8 millimeters thick, versus 2.23 millimeters on the third-generation model.

One change that didn't need a teardown to be seen is the fact that Apple managed to support all cellular frequencies and technologies -- or at least those it wanted to -- in one variant. As opposed to recent past launches, there are only two variants of the iPad Air: WiFi-only and WiFi + cellular.

Apple was not able to do this with the iPhone 5s, which has GSM and global versions. Rassweiler said:
This is something Apple tried to do with the iPhone 5s and 5c, but it couldn’t quite get there. One single model of the iPad Air is able to work with all U.S. wireless carriers.
He added that space may be the issue, saying that there probably simply is just not enough real estate to mount all the chips required into the smaller sized iPhone.of an iPhone. As chips get smaller, future iPhone models will likely benefit from a single model for all carriers.

A single variant could obviously improve profitability, so Apple will likely move to that sort of structure as soon as it can, either by size improvements in components or -- perhaps, those who are more eyesight-challenged hope -- via a larger iPhone.



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