Apple took the wraps off the latest 4-inch iPhone SE in March this year and the company is selling the smartphone at a starting price tag of $399. Teardown of the handset reveals that it costs Apple only $160 to make an iPhone SE.
It's no secret that the iPhone SE's design is borrowed from the iPhone 5s. Beyond the smaller screen size and lower display resolution, however, many other software and hardware specs of Apple's cheapest iPhone are at par with the latest iPhone 6s, which makes the smartphone highly attractive to those looking for a smaller iPhone.
IHS Technology has conducted a teardown of the iPhone SE and has estimated that the materials of the iPhone are worth $156.20, with manufacturing costs slightly bumping up the price to $160.
The tech research group revealed that the Gorilla Glass display is the most costly component with an estimated price of $20. In comparison to the display of the iPhone 5s, it was twice more expensive than that of the iPhone SE, not to mention Apple spends $199 to build the iPhone 5s. Also, according to a previous report, it costs Apple $236 to make an iPhone 6s Plus and about $211.50 to build an iPhone 6s.
The teardown also found an LG Display panel in the iPhone SE. Apple sources 40 percent of the phone's displays from Japan Display, about 35 percent from LG Display and the balance from Sharp. David Hsieh, a senior director at IHS Technology, says that the manufacturing of the iPhone display is a complex task as Apple wants more than one supplier to ensure adequate supply.
It's worth mentioning that the $160 iPhone SE is the 16 GB version. IHS estimates that Apple is making an additional $89 per device for the 64 GB variant of the handset due to 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," says Wayne Lam, principal analyst, mobile devices and networks at IHS Technology.
The 16 GB iPhone SE's retail price is $399 while the 64 GB variant costs $499 in the U.S. The difference between the manufacturing cost and retail price of Apple newest iPhone is quite big. However, it is important to note that $160 does not include research and development for the product, logistics, salaries, and marketing.
