Here's how much the iPhone 7 costs to make

An unsubsidized 32GB iPhone 7 will set you back $649, but how much does it cost Apple to make?
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

It's no secret that Apple pulls in a very healthy profit margin from its hardware, and it does that by working hard to keep component and assembly costs down while at the same time keeping prices buoyant.

But just what are the cost of the components that are inside the new iPhone 7?

According to a teardown carried out by IHS Markit, a 32GB iPhone 7 that retails for $649 costs Apple only $219.80 in components, with manufacturing adding another $5 to the price.

Note that the bill of materials does not include other development costs, such as R&D.

This might seem low, but compared to previous years Apple is spending more on components.

"Total BOM costs for the iPhone 7 are more in line with what we have seen in teardowns of recent flagship phones from Apple's main competitor, Samsung, in that the costs are higher than in previous iPhone teardown analyses," said Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit. "All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past."

One of the changes putting upward pressure on the bill of materials is Apple's revamping of the storage structure.

"Despite significant cost erosion in NAND flash over the last year, this increase in the overall memory cost definitely puts pressure on the bill of materials costs -- and therefore margins -- from Apple's perspective," Rassweiler said.

Another factor increasing the bill of materials is the new Jet Black finish.

"This is a new feature that produces a whole new look for the iPhone," said Wayne Lam, principal analyst of smartphone electronics, IHS Markit. "It is a lower yielding, time-intensive manufacturing step that adds cost, as well as considerable value, pushing the retail price higher for those requesting this option."

See also:

Cool, new iPhone 7 and iPhone 7 Plus accessories

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