If Apple Inc’s marketing of its recently announced iPad is successful, the consumer electronics giant could make a hefty profit on the tablet devices.
Indeed, according to a virtual teardown by iSuppli Corp, even if Apple chooses to slash prices on the iPad for the holiday season, as rumors have begun to suggest, the company could still see healthy profit on several of its iPad models.
In its report, iSuppli noted that the mid-range, 3G-wireless version of Apple’s upcoming iPad is expected to carry a combined BOM (bill of materials) and manufacturing cost of $287.15, making it the most profitable member of the iPad product line on a percentage basis.
The mid-priced version of the iPad equipped with 32 Gbytes of NAND flash memory and 3G wireless capability will contain $275.95 worth of components and other materials, iSuppli estimated. This version of the device will cost $11.20 to manufacture.
“At a BOM and manufacturing cost of $287.15, and a retail price of $729, the 32-Gbyte/3G version is expected to generate the highest profit of any member of the iPad line on a percentage basis,” said Jagdish Rebello, senior director and principal analyst for iSuppli, in a statement. “The 32-Gbyte versions of the iPad cost only $29.50 more to produce than the 16-Gbyte versions, but their retail pricing is $100 higher. This shows that Apple believes the highest-volume opportunity for the iPad resides in the mid range of the product line.”
The 32 Gbytes of NAND flash in the mid-range iPad costs an
estimated $59, compared to $29.50 for the 16-Gbtyes in the low-end
version, accounting for the cost differential, iSuppli said.
The iPad’s display and touch-screen interface comes at a combined
cost of $80 for all models and represents the most expensive
segment of the system, accounting for 29% of the BOM of the
mid-range 3G model, according to Vinita Jakhanwal, principal
analyst for iSuppli.
While the iPad’s display probably is sourced from three suppliers,
LG Display and Innolux are the two most likely suppliers of the
iPad’s IPS (in-plane switching) LCD, Jakhanwal said. The
touch-screen controller chip likely is supplied by Texas
Instruments, iSuppli said.
Meanwhile, NAND flash memory is expected to be the second most
expensive item in the iPad’s BOM, regardless of the model. In the
mid-range 3G model, the 32 Gbytes of NAND accounts for 21.4% of the
total BOM, iSuppli estimated. Likely suppliers of the NAND are
Samsung Electronics and Toshiba, iSuppli said based on its previous
teardowns of Apple iPhone and iPod products.
The iPad’s applications processor and DRAM are expected to carry a
combined cost of $28.90, representing 10.5% of the mid-range 3G
model’s total BOM, making them the third most expensive line item
in the mid-range tablets, iSuppli said.
The A4, Apple’s in-house designed processor for the iPad, is expected to carry a $17 cost. Apple has so far been tight lipped about the A4. ISuppli speculated, as other industry watchers have, that the processor integrates an ARM RISC architecture microprocessor and a graphics processing unit. The part likely was designed by PA Semi, which Apple acquired in 2008, iSuppli said. However, the market research company said the device most likely will be manufactured by Samsung.
For memory support for the A4, iSuppli said it expects the iPad to
include 512 Mbytes of DRAM, costing $11.90. ISuppli said it
believes that Hynix Semiconductor is among the DRAM suppliers for
the iPad.
For the 3G-enabled versions of the iPad, the cost of the wireless
subsystem—comprising the baseband IC, the radio frequency
components, the power amplifier and other parts—is estimated at
$24.50, equal to 8.5% of the BOM of the mid-range version, iSuppli
said. ISuppli believes the wireless chipset in the iPad likely is
supplied by Infineon. ISuppli further suggested that the iPad’s wireless LAN, Bluetooth, and FM functionality is likely supported by a Broadcom, while the
GPS chip is probably supplied by Infineon.
The iPad is expected to hit retail shelves next month.
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