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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.

  • jprahman
    .....with more slave labor
    Reply
  • eklipz330
    i'm not impressed

    seriously, does every little thing apple does require an article? if you think it does, you should treat every single device equally, with the same amount of articles. there better be like 20 articles about each android device and how they OBVIOUSLY dropped in production costs tomorrow

    smh.
    Reply
  • lashton
    eklipz330 im with you toms has become an apple fansite its almost disgusting
    Reply
  • razor512
    so apple gets to rip people off even more for the iphone

    Also keep in mind that these costs are estimated since apple refuses to release this info. The estimations also don't take into account the volume discounts that apple gets on the hardware, as well as many other deals and discounts, it can very well cost apple well under $100 to make the iphone

    Reply
  • razor512
    Also wanted to add, if you register on beta sites, you will often see cases in which you will test a smartphone which will retail for like $400-500 but on the waybill for shipping it will have a declared value of in many cases, $40-50, This raises the question of how much is it really costing the companies to make each device.
    Reply
  • Darkk
    Actually it doesn't matter how much it cost to make the phone. Apple is free to charge what they want because they produce the products. You, as a consumer, have choices to buy the iphone or not.

    So if you are complaining that it only cost them $150 to make the phone while they charge $500 then don't buy it. It's that simple.

    Reply
  • ericburnby
    DarkkActually it doesn't matter how much it cost to make the phone. Apple is free to charge what they want because they produce the products. You, as a consumer, have choices to buy the iphone or not.So if you are complaining that it only cost them $150 to make the phone while they charge $500 then don't buy it. It's that simple.
    Exactly. Bloody communist welfare assholes complaining about a company making something and selling it at a profit. OMFG, how can companies get away with this?
    Reply
  • Travis Beane
    DarkkActually it doesn't matter how much it cost to make the phone. Apple is free to charge what they want because they produce the products. You, as a consumer, have choices to buy the iphone or not.So if you are complaining that it only cost them $150 to make the phone while they charge $500 then don't buy it. It's that simple.Nicely put.
    If people didn't want the iPhone, then they wouldn't buy it.
    I personally find it quite impressive on what they can do with such a low budget. Amazing little things smartphones have become.
    Reply
  • shreeharsha
    This is not a ProApple article.
    this is like.... wikileaks on Apple's high profit percentage
    LOL
    Reply
  • joytech22
    Goes to show just how much money Apple really makes per device.

    Hell, if I was the one doing this I would honestly only want at least 10% profit from my sales, simply because it would be cheap, many people would buy it and I would get 10% of the money!

    Seriously $10 profit * millions of sales on apple's end is a LOT of money, greedy greedy people.
    Reply