IHS Insight Perspective
The Mini is one of 3 model families that Apple currently offer, including the iPad 2, the New iPad (9.7-inch retina) and the Mini. The Mini has proven to be very popular, and is reportedly now the best selling of the iPad models, with demand still outpacing supply. Watch for strong demand of this product with Chinese New Year, helping to boost Apple's Q1 sales.
From a design perspective: Apple has little to lose here - just like with Apple TV where they seem to be perpetually "testing" the market waters - in both the cases (Apple TV and the iPad Mini) Apple have used a box of "recycled" parts from other designs - for the most part. They did not take a lot of risks in this respect, should the market demand for the product be weak. They have little to use by leveraging a bag of parts largely found in other Apple products.
As always - Apple leverage memory upgrades to keep the ASPs and revenues high. With NAND flash for Apple now south of $0.50 per GB (and no means for consumers to upgrade other than buy it from Apple pre-configured) - Apple can toss an extra ~$92 of margin to the bottom line (32GB vs. 16GB), and an extra ~$184 of bottom-line margin - when consumers upgrade to the 64GB version. It's no wonder the 16GB WiFi only version is hard to come by at Apple stores - they don't want you buying them if they can nudge you higher in the portfolio.
Apple seems to be running out of groundbreaking ideas, though - and their stock value reflects the lack of confidence that the coming years may be as innovative as the last 10. Furthermore, with the behemoth Samsung as an industry juggernaut and fast-follower in the space - Apple will be challenged to maintain their elite products only portfolio - and will have to compete on more fronts - hence the rumored "cheap" iPhone to be released later in 2013. This competition is forcing Apple to compress product cycle times as well.
The iPad Mini is a roughly 8" diagonal tablet (vs. the 9.7" diagonal "iPad 4th gen') it comes in more than 12 variations with the following permutations: black or white case (2x), 16GB, 32GB, or 64GB (3x), and Wifi or WiFi + Cellular (LTE for multiple networks). There should be minor differences between carriers in the RF/PA sections as we have seen with previous iPhone and iPad designs.
Inside the iPad Mini there are few surprises - but a lot of leveraging common platform parts - such as the A5 processor. This A5 processor is dual core (the Apple TV uses a single core version of the same chip. This means they are likely sorting our A5s with "bad cores" then fusing them out - for the Apple TV. It's a clever way to improve the usable yield of the A5.). The A5 dual-core 32nm chip is also now used in the iPod Touch release in Oct 2012). The iPad Mini also uses the same Dialog Semi power management chip found in the iPad 2 (back in March 2011). The iPad Mini features what seems to be a new Cirrus audio codec. The 7.9" display is (1024x768 resolution) with GF2 multitouch touchscreen. "GF2" is a technology that can make the touchscreen module thinner. This technology allows thinner display module, but makes the manufacturing more challenging (with lower yields) at the beginning of production. So the yield of the display is lower, which causes the costs to be higher. This is reflected in our pricing assessment. See DisplayBank analysis (included with teardown) for more details on the display and TSP.
Released concurrently with a new generation of iPad (4th generation) - Nov 2, 2012
Pricing and Availability
From $329 to $659 MSRP
Model Torn Down: Apple iPad Mini (WiFi only + 16GB) - Retailing for $329 - (base model)
Other models of iPad Mini include 16GB/32GB/64GB - $329/$429/$529. And the "WiFi + Cellular" (LTE) options include 16GB/32GB/64GB - which retail in the US for $459/559/$659.
version of similarly configured WiFi only versions.
45,000,000 Annual Volume
2 Total Years
For the purposes of this teardown analysis, we have assumed an Annual Production Volume of 45000000 units and a Product Lifetime Volume of 2 year(s).
Teardown volume and production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed volumes are different by an order of magnitude, minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis because of this.
According to IHS iSuppli's Worldwide Tablet Q4 2012 Market Tracker (2012) - release in December 2012:
Apple had roughly 56% of tablet shipment market share in Q3 2012. Samsung, at nearly 19% market share in the same quarter will quickly become a much larger share competitor for Apple. Beyond Apple and Samsung - most players have very small pieces of a very fragmented market (even Amazon had only 5.2% of market shipments in Q3 2012.). Shipments for the iPad Mini used in this analysis are approximate and for cost estimation purposes and are not intended to be used as market forecasts. Refer to IHS iSuppli's tablet research area for more detailed forecasts and unit shipment estimates.
Apple has incredible pricing leverage, but also often has premium specifications. It would be a mistake, for example, to assume that Apple simply use commodity NAND flash, or common batteries - everything with Apple is a premium selection, but that usually comes at a very low price nonetheless. Others who have estimated costs in the media are unaware of the special specifications in some cases, and the uncommon cost drivers that IHS iSuppli's analyst team has the distinction of being able to dig into. Though our estimates are indeed estimates, they account for real market conditions and circumstances unique to Apple, and represent a collective group knowledge of the Apple and general electronics supply chain.
Next to Samsung, Apple have the most pricing leverage with suppliers in the handset space currently. Other handset OEMs are starting to distance themselves negatively on component pricing, as they lose supplier relevance due to market share losses, or attempt to negotiate more lax payment terms, that ultimately make such handset OEMs a lower priority to suppliers, and can cost these OEMs with higher component prices.
Cellular Option - The addition of a 4G module would represent, in cost terms, based on our recent iPhone 5 analysis, approximately $33 - $35 in additional hardware costs to support cellular LTE connectivity (as of early Q4 2012). Pricing is a moving target. These costs exclude essential IP licensing fees such as CDMA/WCDMA/LTE wireless licensing technology. In other words - the real (total) costs to Apple are greater than the material costs only.
The Top 10 components listed below account for 79% of the total BOM for the iPad Mini. os
Display Module - 7.9" Diagonal, 1024x768 Pixels, LED Backlight, IPS Technology- (Qty: 1)
Touchscreen / Display Window - 7.9" Diagonal, Glass Over ITO Film, Capacitive- (Qty: 1)
Enclosure, Main, Bottom - Machined Aluminum, Anodized, Etched, Printed- (Qty: 1)
Dynapack Battery - Li-Polymer, 3.72V, 4440mAh, 16.5Whr, w/ Integral Flex, & Board to Board Connector, 1 Cell- (Qty: 1)
Primary Camera Module - 5MP, BSI CMOS, 1/4" Format, Auto-Focus Lens- (Qty: 1)
Samsung APL2498 Applications Processor - Dual ARM Core, 32nm, PoP- (Qty: 1)
Compeq 10-Layer - FR4/RCF HDI, 2+6+2, Lead-Free, Halogen-Free- (Qty: 1)
SK Hynix H2JTDG8UD2MBR Flash - NAND, MLC, 16GB- (Qty: 1)
Elpida EDE4064P3PM-8D-5 SDRAM - Mobile DDR2-800, 4Gb, PoP- (Qty: 1)
Murata BT / WLAN Module - Contains Broadcom BCM4334, IEEE802.11 a/b/g/n, Bluetooth V4.0+HS- (Qty: 1)
Not Included in Analysis
The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.
We do provide an Excel tab "Overall Costs" where a user can enter their known pre and post production costs to build a per unit cost reflective of theirs actual expenditures.
Apple uses Hon Hai / Foxconn for the production of most of it's products but we understand that the iPad Mini is currently being exclusively produced by Pegatron. IHS iSuppli's own outsourced manufacturing research group have more detail on these relationships.
Country of Origin
For the purposes of this analysis, we are assuming the following country(ies) of origin for each level of assembly, based on a combination of "Made In" markings, and/or assumptions based on our knowledge of such equipment.
Box Contents - China
Camera Assembly - China
Display - China
Main PCB - China
Misc PCB Assemblies - China
Other - Enclosures / Final Assembly - China
Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of "finished" sub-assemblies (such as combo modules (BT+WiFi)), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.
Labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. "Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. This calculation is affected by country or region of origin as well.
Component counts by assembly and the number of assembly are indicators of design complexity and efficiency.
Component Qty: 669 - Main PCB
Component Qty: 5 - Display
Component Qty: 1 - Touchscreen
Component Qty: 122 - Other - Enclosures / Final Assembly
Component Qty: 52 - Camera Assembly
Component Qty: 76 - Misc PCB Assemblies
Component Qty: 13 - Box Contents
Component Qty: 938 - Grand Total
All designs vary significantly from one to another in terms of complexity and component counts which are largely driven by feature choices. More features = more components and cost.
The iPad Mini WiFi only version features a component count of ~930 components. This WiFi only version will feature approximately 350 components LESS than the LTE version (based on the RF, PA and Baseband component counts from the iPhone 5). The iPhone 5 LTE features ~1420 components, as a point of comparison. Scale / Size (iPad vs. iPhone) often does not equate to elevated complexity.
All iPads are basically large displays with touchscreens - and the choice of display technology is as important, if not more important, than the choice of CPU. And because of their relationship with Samsung - you typically see LG Display and other brands in the display and touchscreen slots. The 7.9" display is (1024x768 resolution) with GF2 multitouch touchscreen. "GF2" is a technology that can make the touchscreen module thinner. This technology allows thinner display module, but makes the manufacturing more challenging (with lower yields) at the beginning of production. So the yield of the display is lower, which causes the costs to be higher. This is reflected in our pricing assessment. See DisplayBank analysis (included with teardown) for more details on the display and TSP.
Processor - The core of the iPad Mini is a "recycled" A5 processor dual core processor in 32nm process geometry. The Apple TV uses a single core version of the same chip. This means they are likely sorting our A5s with "bad cores" then fusing them out - for the Apple TV. It's a clever way to improve the usable yield of the A5.). The A5 dual-core 32nm chip is also now used in the iPod Touch release in Oct 2012).
Other Components - The iPad Mini also uses the same Dialog Semi power management chip found in the iPad 2 (back in March 2011). The iPad Mini features what seems to be a new Cirrus audio codec.