An analysis posted by IHS pegs the total component cost for the 4-inch iPhone SE 16GB at around $160. The handset’s retail price in the United States is $399 for the 16GB version, with the $499 64GB variant component cost pegged at $170.
IHS estimates that the materials for the device cost $156.20, rounded up to $160 with the addition of manufacturing costs. Apple is believed to have kept the base cost of the iPhone SE relatively low by using a number of parts designed for the iPhone 5s, 6, and 6s, allowing the device to be sold to consumers at a $399 starting price due to price drops on the original components.
The firm says that the A9 chip inside the iPhone SE costs Apple $22 to bill, while the modem from Qualcomm costs the company $15. The 4-inch display on the iPhone SE, which is manufactured by LG Display, costs Apple a mere $20 — less than half of what it costed the company on the iPhone 5s back in 2013.
When it comes to the 64GB iPhone SE, IHS estimates that Apple is making an additional $89 per device over the 16GB iPhone SE, due to the relatively low cost of memory upgrades.
“Apple is willing to drop its gross margin on the low end to induce sales — though it is likely counting on many consumers upgrading to the more profitable 64 gigabyte SE model,” said Wayne Lam, principal analyst, mobile devices and networks, IHS Technology. “When the profit machine that is Apple capitulates to the market forces of a maturing industry, it shows its tacit acknowledgement that even it is not immune to the dynamics of the global smartphone slowdown.”
An earlier report from CNN suggested the iPhone SE components have a total cost of $220, but IHS has a longer history and more experience with component pricing estimates.
Most smartphones nowadays cost around $200 to $270 to build, but are usually priced around $700. This is because a lot of money goes into research and development, support, and other miscellaneous expenses related to that product.
In the past, Apple CEO Tim Cook said that component cost breakdowns on Apple products are inaccurate. “There are cost breakdowns around our products that are much different than the reality,” he said. “I’ve never seen one that is anywhere close to being accurate.”