Keep your friends close and enemies closer. That appears to be lesson from new iPad release, which shows Samsung are still major supplier to Apple, despite their ongoing global patents war.
That’s according to IHS iSuppli who revealed Samsung made the super-res Retina display, Apple’s new A5X chip processor and (possibly) lithium polymer battery contained in new iPad, released Friday.
If true, the Samsung accounts for as much as 50% of total cost of new iPad in some cases, and is more expensive for Apple to make than iPad 2, despite identical selling price, meaning Cupertino were prepared to go the extra mile to satisfy iPad fans eager for a cutting edge update.
The high cost of new tablet is partly because new iPad’s 9.7″ ultra bright Retina display costs 53% or $30 more than previous versions.
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The guru’s at IHS iSuppli Teardown Analysis Service who dissected a new iPad 32GB + 4G model piece by piece found raw materials worth US$364.35, while Apple charges $789 selling price.
Add on $10.75 manufacturing, bringing total cost to $375.10
However, the IHS figures do not take into account other expenses such as software, licensing, marketing and shipping costs.
The bill for a 16GB 4G version amounts to $347.55, (RRP AU$679) while 64GB version costs an estimated $397.95 to make. The very lowest-end version of the new iPad, with 16GB (no 4G) contains $316 worth of materials and sells for $539.
Major factors driving up the bill for new iPad include the high-resolution Retina display, LTE wireless and a larger-capacity battery. The packaging box for new iPad alone costs $5.50.
“Samsung Electronics continues its reign as the big winner in the individual iPad” says IHS iSuppli Teardown team .
The Retina display is the new iPad’s most expensive single component costing $87 – 24% of total costs – while the new faster ASX5 processor costs an estimated $23, or 6.3%, which Samsung is also responsible for.
In a 32GB 4G LTE version Samsung accounted for 30.2% of the new iPad’s bill of materials, the largest for any supplier but the IHS analysts also believe the battery cells are also supplied by Samsung, meaning the Koreans accounts for nearly 50% of the new iPad’s materials bill.
Samsung is one of the biggest display makers in the world and Apple is one of its biggest customers.
In the new iPad model analysed by IHS, the NAND flash was supplied by Toshiba, although Samsung is also a NAND source for the device.
The new Retina display – four times the res of iPad 2 – is the most obvious enhancement in features compared to previous generation models, said Andrew Rassweiler, senior analyst, IHS.
The first two generations Apple tabs had a screen with resolution of 1,024 by 768 pixels, while new iPad, Apple has taken a significant step up in capabilities, sporting a res of 2,048 X 1,536 pixel.
There is three ‘likely’ sources for the new display: Samsung, LG and Sharp but IHS reckons it is likely that all the volume shipments of the new iPad display are currently from Samsung.
Other iPad costs include: touch screen costs an estimated $40, or 10.9% of total, sourced from suppliers TPK, Wintek and Chi Mei.
The 4G LTE wireless section -using Qualcomm MDM9600 baseband processor costs $41.50 or 11.4 % of the total bill of materials (BOM) – significantly more expensive than the $25.60 3G wireless section of the iPad 2.
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The new 5MP iSight camera design/ cost is the same as iPhone 4 is priced at $12.35, representing 3.4% of total bill.
The lithium polymer battery in the new iPad supports 42.5 watt hours, is a major upgrade from previous versions, up about 75% from 25 watt hours in the iPad 2, is not cheap either costing $32.
But in case you think new iPad could be the cause of yet another patents row between the two tech giant – think again- Samsung is as a “foundry partner” to Apple, meaning Cupertino is the designer and owner of the intellectual patents of the A5X chip. Phew.
Samsung is likely on a lower profit margin for new iPad than if its designed the technology itself.
“The NAND flash memory is one of the key profit-generating components for Apple in the new iPad line, as it has been in previous iPads and in the iPhone family,” Rassweiler noted.
Apple also makes more money selling consumers NAND flash than NAND flash manufacturers make selling it to Apple. And the more flash in the iPad, the higher the profit margin there is for Apple, say analysts.