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Teardown: Galaxy S5 parts cost 21% more than iPhone 5S

Matt Hamblen | April 17, 2014
IHS says Samsung's new phone costs $251 for materials, $51 more than the retail cost of a carrier-subsidised unit.

The Samsung Galaxy S5, which went on sale Friday, comes with an "astronomical" cost for materials of $251.52 for the 32 GB version, according to a teardown estimate by IHS Technology.

The S5's materials cost is 21% higher than the $207 cost for the 32 GB iPhone 5S, based on IHS's pricing last September. It also costs Samsung $51 more for the parts used in an S5 than what it costs for a U.S. consumer to buy one under a contract.

Samsung Galaxy S5
The Samsung Galaxy S5

The price for the S5 is $200 with a two-year contract at most U.S. wireless carriers, although Verizon Wireless has been offering a buy one, get one free plan for $200 after rebate with a two-year plan, or $600 with no contract.

In related news, a Samsung executive on Wednesday told the Reuters news service he expects S5 sales to "be much better" than the Galaxy S4 based on sales in initial days. The S4 sold 10 million units in the first month in spring 2013.

IHS, in describing the high materials cost for the S5, also indicated how low the prices for other Android phones can go. Two low-cost Android phones, the ZTE U793 and the K-Touch T619+, each cost less than $35 for materials, IHS said.

S5's high materials cost is becoming more typical of the Galaxy smartphone line. Materials costs for four other Galaxy devices range from $237 to $280, according to Andrew Rassweiler, senior director of cost benchmarking services for IHS.

Rassweiler called the S5, overall, a "conservative evolutionary design" with many similarities to previous Samsung smartphones, but also many small changes.

One major change in the S5 is the inclusion of 802.11ac Wi-Fi, with multiple-input, multiple-output (MIMO) antennas to improve Wi-Fi signal strength.

A major factor in the overall cost is the use of a core processor from Qualcomm that uses the newer Snapdragon 801 design, with a speed of 2.5 GHz, up from 2.3 GHz used in the Snapdragon 800 seen in the Nokia Lumia 1520, the Galaxy Round and Google's LG-made device the Nexus 5.

The new processor takes up $41 of the S5's $251 total cost, a higher-than-expected figure because it combines two previously separate chips -- the core applications processor and the wireless semiconductor, IHS said. Apple's iPhones and other Samsung smartphones still use separate chips and Samsung apparently made the move to save internal circuit board space and to reduce overall manufacturing costs for installing two separate chips. IHS put the manufacturing cost for each device at $5.


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