32GB iPad 2 costs $336.60 to manufacture

The iPad 2 has only been available for a few days, but market research company iSuppli has already managed to compile a bill of materials and a manufacturing cost for the new tablet.
In what may come as a shock to Apple’s competitors, the Cupertino company not only has a desirable price point, it also manages to make a very healthy profit on the sale of every iPad 2.
The bill of materials, according to iSuppli, comes to $326.60 for the 32GB GSM/HSPA V version of the tablet. The 32GB CDMA model is slightly cheaper at $323.25. In both cases manufacturing costs add an additional $10 per device.
With that in mind, and a total cost of $336.60, Apple is making in the region of $329.40 profit per 32GB iPad 2 sold (based on a purchase price of $729). That’s before taking into consideration transport and marketing costs, but even with those costs added there’s still going to be a very healthy margin left.
The breakdown of costs for the 32GB GSM/HSPA model is as follows:

• 9.7″ display – $127
• 32GB Memory – $65.70
• Glass/Metal/Plastic/PCBs/connectors – $35
• Battery – $25
• Baseband/RF/PA – $18.7
• Apple A5 chip – $14
• Accelerometer/gyroscope/compass/light sensor/multitouch controller – $11.90
• Power management – $10.20
• BT/FM/GPS/WLAN – $9
• Packaging and literature – $5.80
• Camera – $4.30

As DigiTimes points out, the biggest cost increase has come from the display and the A5 chip. The display has risen from $95 on the iPad to $127 for iPad 2. This is thought to be due to a change in materials used including better glue for bonding, a thinner gorilla glass solution, and better optical and panel examinations. The A5 costs 75% more than the A4 processor, but this is expected to decrease very quickly as production increases in the coming months.
iSuppli did a similar breakdown of component costs last year for the base 16GB Wi-Fi iPad. Then the bill of materials came to $259.60, but it was a lower end model with half the memory and only Wi-Fi connectivity unlike with this breakdown. Even so, the price is in line with those original costs showing Apple has improved on performance while maintaining its overall spend. By doing so it must have been an easy choice to keep the price of iPad 2 exactly the same as the original iPad.
Samsung manages to manufacture its Galaxy Tab for significantly less at just $214.57, but those savings come in the form of smaller components (the display) and savings on chips which Samsung manufactures itself.
Those interested in learning more about the internals of the iPad 2 should take a look at the iFixit teardown carried out on launch day.

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