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Apple Reduces iPhone 4 Production Cost

The company estimates the bill of materials of the CDMA iPhone 4 at $171.35, which is down from $187.51 of the original iPhone 4 that is currently sold at AT&T. The number climbs to $178.45, if assembly is included and we conclude that Apple has just dropped its production cost by about 9% and the margin climbs to about 70%, excluding packaging, shipping, R&D as well as marketing and operational expenses.

The teardown team  found that Apple changed the antenna design and likely improved the reception capability. “Apple has decided to isolate the Bluetooth/WLAN antenna from the enclosure/antenna assembly,” said Wayne Lam, senior analyst, competitive analysis at IHS. “This design change leaves the top enclosure antenna segment to serve primarily as the GPS antenna and probably also as a CDMA diversity receive antenna. The use of antenna diversity is significant because this scheme improves signal reception performance.”

The CDMA iPhone 4 also integrates the Qualcomm’s MDM6600 baseband/RF transceiver, which replaces the Infineon PMB9801 baseband chip in the UMTS/GSM version of the phone. “The Qualcomm part not only provides support for the CDMA air standard required to make the iPhone 4 compatible with Verizon Wireless’ 4G wireless network, it also integrates GPS control circuitry, which was supported by a separate chip-Broadcom’s BCM4750-in the previous version of the iPhone 4,” IHS iSuppli said.

“With the CDMA iPhone 4, Apple has shown once again that it never recycles a product design,” said Andrew Rassweiler, senior director, teardown services, for IHS. “Apple’s new designs always exhibit changes, evolution and optimization. This approach is evident not only in the antenna design but also in items like the integrated GPS functionality and the shrinking of the Wi-Fi/Bluetooth combo module. As we dig deeper into our teardown analysis, we’re certain that we will find a host of other tweaks all designed to improve quality but keep costs on a steady path of decline.”

It appears as if Verizon iPhone buyers do not get an old iPhone 4. It may actually be an updated version that will arrive sometime later this year at AT&T.