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IHS Markit Teardown Shows $370 Is Cost For Materials For One Unit Of Apple iPhone X

IHS Markit Teardown Shows $370 Is Cost For Materials For One Unit Of Apple iPhone X
A bill of materials (BOM) of $370.25 is carried by the new iPhone X, according to His Markit whose teardown engineers made a preliminary physical dissection of Apple’s latest creation. The engineers found that the model A1865 version of the smartphone has 64 gigabytes (GB) of NAND memory.
“Apple’s Face ID system is very similar in basic functionality to the old Microsoft Kinect system of sensing, which used a flood illuminator, dot projector and infrared camera”, the company said.
Compared to the previous most expensive iPhone – the 8 Plus 256 GB, the iPhone X is $50 costlier at a starting price of $999. A comparable smartphone of Samsung and carrying a starting price of $720 is Samsung’s Galaxy S8 which has 64 GB of NAND memory and a BOM of $302.
“The iPhone X is the most expensive iPhone ever made, and it has the highest retail price tag of comparable flagship phones, catapulting the smartphone industry to an entirely new price point,” said Andrew Rassweiler, senior director of cost benchmarking services at IHS Markit.
“While the iPhone X represents Apple’s biggest step forward in design since the iPhone’s debut in 2007, its underlying architecture is analogous to the iPhone 8 Plus,” Rassweiler said. “Both models share platform-common components, but the X’s superior screen and TrueDepth sensing set the phone apart and contribute to its higher cost.”
Apple is calling the iPhone X as the next decade of iPhone design and was released on the 10th anniversary of for the release of the first iPhone by Apple founder Steve Jobs. The large difference in pricing between the iPhone X and the most expensive iPhone 8 Plus model SKU (stock keeping unit) makes the pricing strategy of the new model unique.
“Typically, Apple utilizes a staggered pricing strategy between various models to give consumers a tradeoff between larger and smaller displays and standard and high-density storage,” said Wayne Lam, principal analyst for mobile devices and networks at IHS Markit. “With the iPhone X, however, Apple appears to have set an aspirational starting price that suggests its flagship is intended for an even more premium class of smartphones.”
The typical margins for its hardware that Apple maintains has also been kept upto for the iPhone X, considering the BOM cost and retail pricing, IHS Markit believes. And over time as there is improvement in the manufacturing yields, the gross margin may also increase further.
While ST Microelectronics provided the silicon, Sony/Foxconn supplied the IR camera, revealed the teardown of the iPhone X. ST Microelectronics also supplied the single-photon avalanche diode (SPAD) detector while Texas Instruments supplied the flood illuminator which is an IR emitter. The dot projector was manufactured by Finisar and Philips. $16.70 was the price for the rollup BOM cost for the TrueDepth sensor according to IHS Markit.
“The assembly and testing of the TrueDepth system and its individual components is challenging and likely a factor in the production delays,” Bouchaud said. “For instance, the assemblage and test of the Texas Instruments and ST Microelectronics subsystem for the flood illuminator is far from trivial and requires a high number of test equipment pieces.”

Christopher J. Mitchell

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