Virtual Teardown Shows Apple iPad Tablet Costs $399

Now that we have more details of the Apple iPad out in the wild, we will be proceeding to a virtual teardown à la iSuppli, using data available from the analyst firm; for that, we will use the teardown they did of the iPhone 3GS as a benchmark.

Back in June 2009, iSuppli said that the iPhone bill of manufacture (BoM) and manufacturing cost were a shade under $179 which left it with a very tidy profit.

We have managed to update a few details based on publicly available data. Obviously there is bound to be some significant discrepancies especially when it comes to the price of the screen which is a big unknown. The analysis is for the 16GB version without WiFi.

By our estimate, the display module, a 9.7-inch LED-backlit model with a screen resolution of 1024x768 pixels and IPS technology, is just under 8x the size of the iPhone 3GS.

Three factors will influence the price; (a) demand (b) yields and (c) technology used. For the sake of clarity, we'll assume that the screen is 8x the price of the 3.5-inch iPhone 3GS; that's $154.

The other major component price wise is the touch screen assembly which is likely to cost around $100 because Apple has chosen to put more than 1000 captors on the screen - that's roughly 3 sensors per square millimeters (or 22 sensors per square inch).

The 16GB memory (MLC Flash 16Gb 2048Mx8) costs $32.80 as of today (Contract price) although Apple would certainly get a significant discount.

The 3GS used an ARM Core silicon, one based on the Cortex A8, possibly similar to what's inside the Apple A4 chip that's inside the iPad. The cost price back in June 2009 was $14.46. We'll stick to that price for simplicity.

A 2GB Mobile DDR Package-on-package (mounted on Application processor) memory module will set you back at around $12, factoring in the recent price increases that hit the sector. Again Apple will certainly get a significant discount.

The rest of the components, Bluetooth/WLAN Single Chip ($5.95), Power IC ($1.30), Audio Codec ($1.15) and Accelerometer chip ($2).

The rest of the bill of material, which includes connectors, the enclosure (front and back), screws, the battery and other bits and pieces is likely to be significantly more than the $48 that iSuppli budgeted for the iPhone 3GS.

That's partly because Apple has chosen a recyclable aluminium and glass enclosure which increases its manufacturing costs massively. We shall budget $75 for it as well; this includes the price of manufacturing as well. The grand total, at least we think, is around $399.

As per iSuppli methodology, the figure excludes costs like "manufacturing software development, shipping and distribution, packaging, royalty fees and miscellaneous accessories". This means that, unlike its products, Apple will enjoy single-digit, Taiwanese-like margins on the iPad in order for it to succeed.