How Much Does That New iPad REALLY Cost To Make?


Fortunately for all of us, that burning question has a relatively reliable answer. A company named iSuppli broke the costs down and determined that the components for each of the released models of iPad come in at the following totals for parts:

iPad 16GB version – $259.60 ($236.40 profit for Apple)

iPad 32GB version – $289.10 ($309.90 profit for Apple)

iPad 64GB version – $348.10 ($350.90 profit for Apple)

Roughly a 50% margin, give or take. I don’t believe that includes assembly or getting the devices to the States, as well as other charges involved with product marketing, store shipments, etc. Still not bad given that prices on hardware will continue to decline over the life of the product giving Apple even more margin over time.

Interestingly enough, more than 40% of the iPad’s costs are consumed with components powering the touchscreen display and user interface of the device. Here’s what I gathered for individual component costs for those interested:

Touchscreen Display – $95.00

Processor/Main Chip – $26.80

Flash Memory Chips – $29.50 (16GB); $59.00 (32GB); $118 (64GB)

Broadcom Chip for Bluetooth & Wi-Fi – $8.05

Texas Instruments Chip to help control touchscreen – $1.80

2 Additional Chips used to control touchscreen – $3.70

Ciruss Logic Audio Chip – $1.20

Aluminum Casing on Device Back – $10.50

For as expensive as everyone complains Apple hardware has always been, a 50% gross margin doesn’t seem out of line by any stretch. They make great devices that I’ve always felt last longer than their counterparts.

[Source BusinessWeek.com]

  1. how accurate is all of this and is that all that is in them

    john says...
    April 4th, 2011 at 5:59 pm
  2. Lacks quite a bit of costs in my opinion!
    for example
    -Apple Infra

    Who ever did these calculation about profit, should not start a business of their own :)
    When has profit been calculated like this?

    JTS says...
    June 26th, 2011 at 3:21 am
  3. The costs of parts isn’t the whole story. In determining that Apple makes a 50% profit on its iPads you are of course assuming that all of Apple’s engineers, programmers, designers, artists, marketers, etc all work for free.

    Of course these are rather fixed costs, so the more units they sell, the more they can disperse these costs, but their profit isn’t 50%. I’ve read that Apple is actually turning something closer to 25-30% on its iPads (which is still a lot, but not the ridiculous amount you write about)

    Chris says...
    November 20th, 2011 at 8:32 pm
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