For every iPhone 6 or iPhone 6 Plus that Apple sells, the company spends anywhere from $200 to $263 to pay for the cost of parts and labor needed to assemble the phone. This is according to a new report shared exclusively by IHS research firm with Re/code.
IHS analysts told Re/code that a 16 GB iPhone 6 that sells for $649 without a two-year contract costs Apple $200 to make, including the $4 to $4.50 it pays for associated labor costs. The 128 GB model, which sells for $849, costs $263 to manufacture. The bigger iPhone 6 Plus is naturally more expensive, with costs for the entry-level 16 GB phablet pegged at $216 going up to $263 for the top-of-the-line 128 GB iPhone 6 Plus. The 16 GB iPhone 6 Plus sells for $749 contract-free, with $100 tacked on to the selling price for every storage upgrade. The 128 GB iPhone 6 Plus is $949 unlocked.
For every memory upgrade, Apple charges $100 more but spends $47 more for the 128 GB models than the 16 GB versions. IHS analyst Andrew Rassweiler estimates that Apple pays around 42 cents per gigabyte of memory from companies such as SK Hynix and Micron.
"They seem to be configured and priced to encourage you to buy the models with the higher memory," he says.
As a result, Apple gets one of the highest profit margins in the smartphone industry, around 71 percent for the 128 GB models and 69 percent for the 16 GB ones. This is in line with Apple's earlier profit margins as estimated by earlier teardown studies. The iPhone 5 and the iPhone 5S, for instance, had a gross margin of 69 percent, while the cheaper iPhone 5C had a margin of 65 percent. In contrast, the first iPhone had a 55 percent gross margin when it was launched in 2007. The figures do not include other costs, such as shipping and marketing the phones.
IHS says the most expensive component on the two phones are the combined display and screen, which Apple pays LG Display and Japan Display $45 for the iPhone 6 and $52.50 for the iPhone 6 Plus. The iPhone 5S had a screen and display that cost $41. The A8 processor and a co-processor meant to handle the phones' sensors are pegged at $20, $3 lower than the A7 processor used for the iPhone 5S. The NFC chip supplied by NXP Semiconductors and an added NFC booster from AG is around $22 for both phones.
