Apple's iPad Air costs less to make than its predecessors, despite its more expensive display, according to a new report that reveals Apple's gross margins for the iPad Air could be as much as 61 per cent.
AllThingsD obtained teardown analysis reports from research firm IHS this week, which include manufacturing cost estimates and a closer look at what's inside the iPad Air.
IHS say that Apple's iPad Air costs between $274 (£170) and $361 (£224) to manufacture, depending on which model is being made. The starting price of the iPad Air in the US is $499, and rises to as much as $929 if you opt for a 128GB WiFi plus cellular model, so Apple is generating at least $225 (£140) in revenue from each iPad Air it sells.
Breaking the cost down further, IHS say that the display and touchscreen assembly have undergone some changes from the previous generations of full-size iPads, and that those changes have added to the cost of manufacturing the display.
According to IHS, it costs Apple about $90 for the display and $43 for the touchscreen, totalling $133. The parts are believed to come from LG Display and Samsung.
So what's changed to make the iPad Air's display more expensive? IHS's Andrew Rassweiler told AllThingsD that there's a new cyclic-olefin polymer sensor found beneath the iPad Air's Gorilla Glass front. Now, there's only one layer of glass as apposed to two found in previous full-size iPads, which has enabled Apple to reduce the thickness of the iPad.
There are less LED backlights, too. In fact, Apple has reduced the amount of LED backlights by more than half in the iPad Air, from 84 to just 36, thanks to brighter and more efficient LEDs and layers of light distributing optical film.
Despite the introduction of the new A7 chip, it actually costs Apple less for the Samsung-supplied processor than it did 18 months ago for the A5, according to IHS.
Rassweiler points out that Apple has managed to create an iPad Air that's able to work with all US carriers, and therefore it's likely that Apple has managed to reduce manufacturing costs this way.
Overall, IHS has concluded that Apple's estimated gross margins for the iPad Air start at 45 per cent for the 16GB WiFi only model to 61 per cent for the 128GB WIFI plus cellular version.
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