Overview / Main Features
The Apple iPhone is a high-end feature handset (and mobile media player, web-browser, etc.) with an innovative capacitive multi-touch touch-screen, 16M color display and WLAN 802.11b/g. The phone supports EDGE quad-band (a surprising choice, given how quickly HSDPA is gaining ground) and features a 2-megapixel camera module, SMS, web browsing, photo editing, and auto-rotating.
But the main feature is - it's an iPhone. Apple takes its X-Factor, branding, and hype and applies it to what is essentially a mediocre phone (functionally speaking). That mediocre EDGE phone with a two-year old Infineon chipset is hooked up to a novel and slick user interface with all of the Apple aesthetic, and turned it into what may become simultaneously one of the top selling phones, while also being a remarkably unsubsidized model - a dual feat on Apple's behalf.
As with other Apple products, there is always a loyal cult following, however Apple's ultimate goal is always to excel with a user interface that draws the average, non-tech savvy person to their product.
Launched on June 29, 2007 exclusively in AT&T and Apple stores in the United States.
Pricing and Availability
At the time of writing and release, this EDGE version of the iPhone is available in a 4GB model for $499 (US) and an 8GB model for $599 (US) with a two-year AT&T service plan agreement.
Based on consumer demand, Apple's brand image, and industry anticipation, and our estimates of market volume shipments by manufacturers and market segment (see iSuppli Design Forecast Tool (DFT) data below), we project that 4.49 million units shipped in 2007.
We also believe that this particular version of the iPhone may have a short lifespan when compared with our typical assumptions for handset life cycles (1.5 - 2years), and are assuming that this will be replaced in with 12 - 18 months, or at least modified in an evolutionary step (with HSDPA, more memory, different case, etc.).
Having said that, we estimate, for the purposes of this teardown, that the current incarnation of the iPhone in question will have a lifetime volume production volume of 11 million units.
As a reminder, teardown volume 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.
Function / Performance
Basic user features were tested, but no power measurements or other tests have been conducted. We still possess a functioning iPhone and, for now, plan to keep it in case further testing is desired at a later date.
Main Cost Drivers (Representing ~77% of total materials cost)
$48.00 - Samsung - K9MCG08U5M - Flash - NAND, 8GB, MLC DSP (Qty:1)
$27.00 - Balda/TPK Solutions - Touchscreen Assembly (Qty:1)
$24.50 - Epson, Sharp, TMD - TFT Display Module Value Line Item - 3.5" Diagonal, TFT, 320 x 480 Pixels (Qty:1)
$14.25 - Samsung - Application Processor - ARM Core (Qty:1) (Package on Package)
$14.00 - Samsung - K4X1G153PC-XGC3 - SDRAM - Mobile DDR, 1Gb, PoP (Qty:1)
$11.45 - Infineon - PMB8876 - Baseband Processor - Single-Chip, Part of MP-E Platform (Qty:1)
$8.75 - (Altus assumed) - Camera Module - 2.0MP CMOS, 1/4" Format - Fixed Lens (Qty:1)
$6.00 - Marvell - 88W8686 - WLAN - Single-Chip, 802.11a/b/g, 90nm (Qty:1)
$3.96 - Samsung SDI and alternate sources - Battery Cell - Li-Ion Polymer, 3.7V, 1170mAh (Qty:1)
$2.25 - ST Microelectronics - LIS302DL - Motion Sensor / Accelerometer - MEMS, 3-Axis, +-2g/8g, Digital Output (Qty:1)
$2.25 - Infineon - RF Transceiver - Quad-Band GSM/EDGE w/Integrated SAW Filters and PLL (Qty:1)
$2.00 - Intel - xx38F1030W0YTQ2 - MCP - 32Mb NOR Flash, 16Mb PSRAM, 1.8V, 130nm (Qty:1)
$1.90 - Foxlink Technology Ltd. - Charger (USB) - 5V, 1A (Qty:1)
$1.85 - CSR - BC41B143A - BlueCore4ROM - Single Chip Bluetooth Solution, V2.0+EDR (Qty:1)
Total BOM Costs (Direct Materials Only)$217.73
Total BOM & Manufacturing Costs $226.61
Why Isn't This the Total I saw in Your Press Release or Market Mover Teardown Report?
Because when we perform a high-level "quick-turns" analysis, we are operating on a condensed timeline under a different methodology from a complete finished teardown report.
We do our utmost at the time of issuing releases to be accurate on the major components that represent the bulk of the cost, while buffering our estimates and make them somewhat conservative for all the "unknowns" (components that aren't all fully counted or spec'ed). At such preliminary stages we havenot completed our research or costed out all of the smaller components, or may not have had the time to examine all sub-assemblies in detail (charger, docking station, etc.). Instead we focus our time on the most valuable components, and make budgetary assumptions for an amalgam of others. These budgetary assumptions are, in the final analysis, replaced with detailed totals summing the actual costs estimated at the component level by all iSuppli analysts.
Furthermore, as our analyses progress we learn new facts; perhaps we learn something new about a process geometry for a given chip, or we may revise volume assumptions, etc. as new information comes in. As a result, the final analysis has boiled down from our estimates of only 48 hours ago (at the time of writing of this summary - 7/3/07) to the current figure which we feel reflects our most up to date cost methodologies and therefore should be comparable to other recent teardowns.
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 costs. 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.
Country of Origin / Volume Assumptions
Based on our knowledge, this unit was assembled in China by Hon Hai Precision Industry Co., Ltd..
Furthermore, we have assumed that custom mechanicals (plastics, metals, etc. were sourced in China, as well. Many of the sub-assemblies may also come from other countries of origin, but for the purposes of this analysis, since there were no other internal labels on sub-assemblies claiming countries of origin other than China, we have stayed with this assumption for all levels of assembly.
It is worth mentioning that while we understand that one major piece of the value puzzle (the touch sensor, touch assembly PCB, TFT and the integration of these elements) may be produced in other countries, we did not break out or calculate internal manufacturing costs using our existing methodology. 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 the touch sensor, touch assembly PCB, TFT and the integration of these elements), 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.
Remember also that 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.
Design for Manufacturing / Device Complexity
The Apple iPhone features a total component count of 886 components (not including box contents), of which 117 components are mechanical in nature. In terms of the component count in the Apple iPhone, the component count is modest. This could certainly be seen "well above average" in terms of complexity when compared with the most basic candybar phone, but would seem more "in line" with or even towards the high end of recently analyzed "smartphones" or PDAs. As points of comparison, the recently analyzed Motorola Q had a total of 880 components, and the Blackberry 8100 only 611.
Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design.
Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.
The Apple iPhone consists of several major functional blocks which in turn are allocated to specific assemblies. At a high level, the two main functional assemblies are the:
Wireless Interface PCB - This PCB contains the complete GSM/EDGE air interface chipset from Infineon, the 802.11 a/b/g flip-chip (note that the device is only configured for b/g, as there is only a 2.4GHz PAM), and finally the CSR Bluetooth Bluecore 4 flip-chip. This PCB is designed separately from the applications PCB for two reasons 1) so that rather than take up more horizontal internal real estate, it can be stacked via BtB connector with the Applications PCB (see below), and 2) it is possible that Apple could produce an HSDPA version of the iPhone and potentially only swap this PCBA out to achieve that.
- and -
Applications PCB - This PCB which snaps together in a low-profile PCB sandwich with the wireless board features the Samsung 8GB of NAND Flash in a single TSOP, the Samsung Applications Processor (with Stacked 1Gb DDR Mobile SDRAM), an NXP power management chip, and Wolfson Micro audio codec (same used in iPod Video). This board essentially covers the whole iPod / media functionality.
Detailed bullets on components are available under each sub-assembly.