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IPhone 5 Costs Stay in Check

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iPhone teardown-380x285

Despite Pricier Display, Apple's Component Expenses Rise Just $9 Above 4S.

Some important components used to build Apple Inc.'s iPhone 5 cost a little more than those of the phone's predecessor, owing to an improved display and a more-advanced main processor chip.

Yet Apple was able to take advantage of lower costs on other components and kept its overall component expenses just slightly higher.

That was the conclusion of an analysis conducted by the research firm IHS on Friday.

The firm estimated the combined cost of the components for the iPhone 5, what is known as a bill of materials, at $197, or only $9 more than for the iPhone 4S. The iPhone 5, is Apple's first to work on high-speed fourth-generation cellular networks, using the Long-Term Evolution technological standard.

The consumer price of the iPhone 5 is the same as for the 4S, $199 for the base model with a new two-year contract. Without a contract, the model sells for $649. Carriers typically subsidize the full price of phones for their customers.

"Most other phones built for LTE had much bigger displays, and everything else inside them got oversized," said Wayne Lam, who worked on the IHS analysis. "That pushed the material costs higher." Apple's Retina Display on the iPhone 5 is the same width as the display on the 4S and about a half-inch longer.

Apple, which is based in Cupertino, Calif., declined to comment.

The Retina Display cost $44, $7 more than the display on the 4S, Mr. Lam said. The new display was manufactured by Japan's Sharp Corp. The iPhone 5's display uses a new technology, In-Cell Touch, that requires fewer layers than previous generations of touch displays.

Other components have gotten less expensive in the past year. The costs for the iPhone's battery, memory chips and Wi-Fi and Bluetooth chips dropped a combined $20, according to IHS estimates.

Samsung Semiconductor Inc. appears to have lost ground with Apple. Samsung continues to manufacture the A6 processor, the iPhone 5's main computing engine, based on Apple's design. But Samsung's memory chips weren't seen in iPhone 5s that have been disassembled, as they were in previous iPhone models...Read more on Wall Street Journal.

Last modified on Friday, 28 September 2012 09:01

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