iPad Air Costs Less To Make Than iPad 3

Interesting article over at AllthingsD for anyone who hasn't read it. Shows how components for the Air cost less than the 3 (though of course that doesn't include other costs associated with making a device).

Here a butchered version with most of the pricing bits:

...Apple’s iPad Air costs between $274 and $361 to build, depending on the model. The device sells at retail for a starting price of $499 for the base 16-gigabyte Wi-Fi only model, and for as much as $929 for a 128GB model with Wi-Fi plus cellular data service.

...The biggest changes, he said, were with the display and touchscreen assembly. For one thing, it’s thinner and has fewer layers in the combined assembly than in previous models. But, at an estimated combined cost of $133 (about $90 for the display and $43 for the touchscreen parts), it’s a lot more expensive than before, he said. South Korean electronics companies LG Display and Samsung are both thought to be suppliers of the display, he said.

...But even with a more expensive display, the total component cost of the base model, at $274, is still $42 cheaper than the entry-level third-generation iPad. That’s because not much else inside the iPad has changed drastically since then.

Yes, there’s a new Apple chip, the A7, but at an estimated cost to Apple of $18 (Samsung still manufacturers it for Apple under contract), it costs five dollars less per unit than the A5 processor did 18 months ago...

Other suppliers include Qualcomm, which provided cellular data network chips at a cost of $32 for the four models that are LTE-ready...

With the iPad Air, Apple appears to have reached a new milestone on the wireless front: It can support every LTE frequency with a single combination of chips. "This is somethingApple tried to do with the iPhone 5s and 5c, but it couldn’t quite get there," Rassweiler said. "One single model of the iPad Air is able to work with all U.S. wireless carriers."

The benefit: Less variation of models mean lower total costs overall, and higher gross profits. He said there’s probably not enough space to pack all the chips required into the smaller enclosure of an iPhone. As chips get smaller, future iPhone models will likely benefit from a single model for all carriers, too, just not yet.

...Depending on the model, flash chips account for between $9 and $60 of the component cost.

All told, IHS estimates Apple’s implied gross margins on the iPad to range from 45 percent on the 16GB Wi-Fi only version to 61 percent on the 128GB LTE version.