New iPad costs Apple more to make than iPad 2

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Folks buying the new iPad aren’t the only ones paying a hefty price. It seems Apple spent a bit more than on the iPad 2 to produce it.

According to a tear-down analysis of the iPad’s innards by IHS iSuppli, the 32-gigabyte version of the new iPad with 4G LTE wireless costs $375 to make. That’s about 50% of the tablet’s $729 price tag. The comparable iPad 2 with 3G wireless, when launched last year, cost Apple about 9% less to build, according to IHS. That iteration carried a cost of about $335 for materials and manufacturing.

What has Apple paying more this time? That higher-resolution screen, the battery with longer life and LTE capability all come at a higher price.


“For the third-generation new iPad, Apple has taken a significant step up in display capabilities and expense, at four times the resolution and 53 percent more cost,” Andrew Rassweiler, senior principal analyst for IHS’ tear-down services, said in a news release.

The Retina display, the most obvious enhancement on the latest generation of the device -- with resolution of 2,048 by 1,536 pixels -- is the most expensive single component, at $87, IHS said. The display on earlier iPad models cost Apple $30 less.

The upgraded lithium polymer battery in the new iPad supports a whopping 42.5 watt hours, about a 75% boost from 25 watt hours in the iPad 2. But because of price drops in the last year, the new battery costs only 40% more than the old one, IHS said.

Another jump in costs between the new iPad and the iPad 2 comes in the wireless section. This is where the guts of the LTE functionality reside, so it’s significantly more expensive than the wireless section in the iPad 2, which supported the 3G standard. Wireless in the 4G LTE version costs $41.50 and accounts for 11.4% of material expense compared with $25.60 in the iPad 2.

The improved camera module in the new iPad, which is the same as in the iPhone 4 in terms of cost and design, cost a combined $12.35 for the front and rear, or 3.4% of materials.
And who is getting the bigger slice of the Apple pie? Samsung, again.

Supplying the Retina display and the applications processor gives Samsung a 30.2% share of the 32-gigabyte LTE iPad, the largest for any supplier, IHS said.

Not too shabby for a company that’s going up against Apple in the tablet market with its own Galaxy line.



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