The most expensive item in the iPad is the $95 touchscreen display. The next big ticket item is the $26.80 processor that was designed by Apple and manufactured by Samsung Electronics. Apple has declined to comment.
The estimate applies to the lowest-priced iPad with Wi-Fi only and 16 gigabytes of flash memory. The $599 version with 32 gigabytes of data costs $289.10 to make, and the 64-gigabyte model that sells for $699 costs $384.10 to make, according to iSuppli.
Roughly 40 percent of the costs are devoted to making the iPad look good. that includes components for powering the display and components of the user interface. The aluminum case on the back of the device costs about $10.50.
The estimate means that Apple gets a healthy profit margin on every iPad it sells, and that it probably has room to cut prices if demand doesn’t meet expectations and as costs fall lower. The estimates don’t include intangible items such as software development, advertising, patent licensing, or shipping. In February, iSuppli estimated that the iPad would cost at least $219.35, but the analysts found more chips than they had anticipated.
Over time, Apple can cut costs by integrating chips together and eliminating components. South Korean manufacturers LG Display and Samsung, as well as Japan’s Epson make the liquid crystal display touchscreen. Taiwan’s Wintek makes the glass overlay that detects multiple touch inputs on the screen. The flash memory chips on the 16 gigabyte model are $29.50, $59 on the 32 gigabyte model, and $118 on the 64 gigabyte model.
Broadcom is the supplier for a $8.05 that combines both Bluetooth and Wi-Fi wireless data radios, as well as two touchscreen-related chips for another $3.70. Texas Instruments makes the $1.80 chip used to control the touchscreen, and Cirrus Logic makes a $1.20 audio chip.