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iPhone: Under the Hood

inside iphoneShortly after a new car hits the market, there are a few gearheads who’ve looked under the hood, kicked the tires and are ready to report on the innards.   The same is true in technology.  The iPhone has been on the market but three days, it’s spawned long lines and moved upwards of several hundred thousand units (300k to 500k phones sold by most estimates)…and a few iPhones have already been intentionally disfigured in the name of curiosity.

Here’s recap of what they’ve found, and a listing of which hardware suppliers won the iPhone lottery:

btn    The screen – the impressive touch screen used on the phone is believed to be made by German company, Balda which specializes in scratch-resistant touch screens.  It is deemed “believed to be made” because the screen lacks specific markings that confirm the origin.  It’s estimated to cost about $30 per screen.

btn    Microprocessor – the heart of the phone is a Samsung chip custom stamped with an Apple logo but with serial numbers traceable to a Samsung product line.

btn  Flash Memory- the storage for music is also made by Samsung.  It is the same flash memory chip used in the 8gb iPod Nano. (a smaller chip is used for the 4g iPhone)

btn    Audio Codec – a codec is a device or program that encodes and decodes a digital data stream.  For audio processing the codec is made by Wolfson.  It is the same as what is used in the iPod video giving the two devices similar sound quality.

btn    Wireless Parts – a couple manufacturers provide connectivity components for the phone.  Marvell provides components for WLAN and CSR (Cambridge Silicon Radio Ltd) provides Bluetooth components that  are also used in the Blackberry Pearl. 

btn  Communication – the core of the phones communication package comes from  Infineon which provides the GSM transceiver and parts for EDGE network functionality.  They cost about $15/phone

btn  Power- Texas Instruments supplies a power-management chip. Skyworks Solutions provides a power amplifier.  Linear Technology Corp makes the phones battery charger chip.

btn  Intel, Broadcom, National Semiconductor, STMicroelectronics, and Peregrine Semiconductor also appear to provide some parts.

All put together, Austin Texas based Portelligent estimates the phone costs Apple about $220 to make (for the 8gb phone and a bit less for the 4gb).  iSuppli estimates peg the cost around $265.  Neither set of numbers includes assembly and delivery costs but with assembly factored in, and any revenue sharing on phones sold in AT&T stores substracted if such an arrangement exists, it is still likely Apple’s gross margins on the phone are around 45%, or by some reports as high as 55% (which model of the phone will also factor into margin estimates).


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