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Teardown shows less BOM cost for iPad Air than iPad 3

Posted: 07 Nov 2013     Print Version  Bookmark and Share

Keywords:IHS  iPad Air  teardown  NAND flash  BOM 

According to the preliminary results from the Teardown Analysis Service at IHS Inc., the iPad Air with 16GB of NAND flash memory and cellular connectivity has a BOM of $304, representing a six per cent reduction from $325 for an equivalently equipped third-generation iPad, based on a final pricing estimate for the device at the time of the release in 2012. When the $6 manufacturing cost of the iPad Air is added in, the total cost to make the tablet increases to $310.

For the lowest-end iPad Air model with 16GB of NAND and no cellular connection, the BOM and manufacturing cost is $274, $42 less than the entry-level third-generation iPad.

"While the iPad Air slims down in size, the profit margins are getting fatter," said Andrew Rassweiler, senior director, cost benchmarking services for IHS. "Although the Air's new, ultrathin display and touch screen are more expensive than for the third-generation iPad, Apple has held the line on cost by taking advantage of price erosion in other areas. Furthermore, the iPad Air leverages the same components and suppliers that are used in the iPhone 5s and 5c as much as possible."

The profitability of the iPad Air rises dramatically as the NAND memory capacity increases. For example, the 32GB model costs Apple only $8.40 more to produce—but has a retail price that's $100 higher.

The iPad Air's thinner form factor is partly due to reductions in the thickness of the display and touch-screen sub-systems.

The Air's display is 1.8mm thick, compared to about 2.23mm for the older-generation iPad. Meanwhile the touchscreen is also thinner with its use of an expensive cyclo olephin polymer (COP) film sensor vs. the thicker and cheaper glass sensor used in the previous models.

However, such svelteness comes at a price, with both sub-systems more costly than before.

The iPad Air's display carries a cost of $90, compared to $87 for the third-generation model. The touch-screen module is estimated at $43, compared to $37.50 for the third-generation iPad.

The iPad Air uses the same Apple-designed, Samsung-manufactured A7 processor found in the iPhone 5s, with some variations.

The Air's A7 IC is packaged with a metal top that acts as a heat sink. The A7 likely runs hotter in the iPad Air than in the iPhone 5s because of the additional processor workload required to render graphics on the larger display.


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