Virtual Teardown Shows Apple iPad Tablet Costs $399

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.