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Kindle Fire Costs Amazon $201.70 to Build

"The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point," said Andrew Rassweiler, senior director, teardown services for IHS. "Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle. This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200. However, they expect to more than make up for that loss with a two-year service contract."

IHS said that Amazon surprisingly uses an "unfamiliar source for the touch screen controller integrated circuit", Ilitek, as well as a wireless local area network (WLAN) module from previously unknown supplier called Jorjin.

Texas Instruments (TI) scored major design wins in the Kindle Fire as it supplies the OMAP4430 processor for an estimated cost of $14.65, the power management device and the audio codec. IHS believes that TI's revenue per Kindle Fire is about $24 per each Kindle, or 12.9 percent of the BOM. The OMAP4430 is based on a dual-core ARM Cortex-A9, 1GHz architecture, which includes the IVA 3 hardware accelerator and a SGX540 3D graphics core.

If you want to know more about the Kindle Fire's insides, check out iFixit's teardown.