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Thursday, November 09, 2017

iPhone 10 X Material Cost vs Samsung Galaxy S8

Teardown engineers at IHS Markit (Nasdaq: INFO) report the model A1865 version of the new Apple (AAPL) iPhone X (iPhone Ten) smartphone with 64 gigabytes (GB) of NAND memory carries a bill of materials (BOM) of $370.25.  With its $999 price tag, the materials make up 37% of the phone's cost with the remainder for items such as manufacturing, marketing and profits.

Samsung's Galaxy S8 with the same 64GB of NAND memory carries a BOM of $302 and full retail price is $720.  At $720, the $302 BOM is 42% of the phone's cost.  I bought my S8 a few months ago at Costco (COST) for $600 and got a $50 gift card this month which lowered the final cost to $550.

Click images to see full size

Apple price graph showing open gaps
If Samsung hasn't lowered their BOM for the S8, then at my $550 final cost is 55% of the total compared with 37% for Apple. 

With a 5% to 18% higher profit margin due to its lower BOM as a percentage of retail price, Apple is clearly positioning its phone as a "status symbol" to take advantage of its popularity while it can.

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