Apple’s iPad Air component cost reduced: IHS

Teardown analysis reveals savings in all model variants

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Apple’s iPad Air component cost reduced: IHS The 16GB iPad Air with cellular connectivity has a BOM of $304.
By Staff Writer Published  November 6, 2013

With the iPad Air, Apple Inc has not only trimmed the weight and thickness of its flagship tablet line, but has also cut the component cost, as the new model carries a lower bill of materials (BOM) than the third-generation iPad introduced last year, according to a teardown report from IHS.

GALLERY: Apple's new tablets

The 16GB iPad Air with cellular connectivity has a BOM of $304, according to preliminary results from the Teardown Analysis Service at IHS Inc. This represents a 6% reduction from $325 for an equivalently equipped third-generation iPad, based on a final pricing estimate for the device at the time of the release in 2012.

When the $6 manufacturing cost of the iPad Air is added in, the total cost to make the tablet increases to $310.

For the lowest-end iPad Air model with 16GB of NAND and no cellular connection, the BOM and manufacturing cost is $274, $42 less than the entry-level third-generation iPad.

"While the iPad Air slims down in size, the profit margins are getting fatter," said Andrew Rassweiler, senior director, cost benchmarking services for IHS.

GALLERY: Apple's new tablets

"Although the Air's new, ultra-thin display and touch screen are more expensive than for the third-generation iPad, Apple has held the line on cost by taking advantage of price erosion in other areas. Furthermore, the iPad Air leverages the same components and suppliers that are used in the iPhone 5s and 5c as much as possible."

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