iPhone 5S Manufacturing Costs Estimated at $199

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After the launch of the iPhone 5S and iPhone 5C last week, Apple (predictably) sold record numbers of the smartphones over the weekend. This is despite rumors of low manufacturing yields due to difficulties surrounding the new fingerprint scanner in the iPhone 5S. Now, with the smartphone finally in the hand of consumers, analysts can estimate just what kind of markup the $649 iPhone 5S has.

Market research firm today announced the results of its recent tear-down of the 5S. The firm estimates that the materials inside the 16GB version of the smartphone run Apple around $191 each. Add in $8 for manufacturing and the total estimated cost for creating one iPhone 5S rises to around $199.

“The iPhone 5s features a 64-bit apps processor, low-power Double Data Rate 3 (LPDDR3) DRAM, and a novel fingerprint sensor - features that have never before been seen in a smartphone,” said Andrew Rassweiler, senior director of cost benchmarking services at IHS. “In addition, it is very interesting to see that Apple continues to collaborate closely with suppliers to develop unique radio frequency (RF) solutions that give Apple a competitive edge.”

The $199 estimate is slightly higher than IHS' estimate last year of $197 to build the iPhone 5. The increased costs can mostly be attributed to upgrades in the hardware of the iPhone 5S, including the fingerprint sensor and the device's new 64-bit processor, while some savings were made by using the same touchscreen panels seen in last year's iPhone 5S. IHS estimates that each new A7 processor costs Apple around $19.

“The move to the 64-bit apps processor is largely driven by the need for greater computational power to ensure that the smartphone’s fingerprint sensor works quickly and seamlessly,” said Wayne Lam, senior analyst for wireless communications at IHS. "This design change will likely set the stage for 64-bit processors to be used in upcoming Apple products, including new models of the iPad, the Apple TV and even MacBook Air PCs.”

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