According to an article in today’s published edition of The Wall Street Journal (paid subscription or free metered view) the material cost of Apple’s new iPhone 5 rises just $9 from that of its predecessor, the iPhone 4.  The WSJ cites the latest teardown analysis performed by IHS Global Insight which pegged the total bill of material cost for Apple latest smartphone to be $197, $9 more than the previous model. Most of the cost increase was attributed to the new larger Retina display, estimated to be $7 more than the 4S model. IHS noted that the component costs for the iPhone battery, memory, Wi-Fi and Bluetooth chips dropped a combined $20. Apple’s latest smartphone is priced at the same level as the previous model.

From a component sourcing lens, the iPhone 5’s larger and more innovative In-Cell Touch display was reported to be primarily sourced to Sharp CorporationSupply Chain Matters has previously commented on the operational and financial challenges facing Sharp.  IHS confirms industry speculation that Samsung memory chips do not appear to be part of the latest iPhone5 bill of material fueling speculation on the fallout of the patent lawsuits between both companies. On the other hand, the total cost of memory components dropped from $28.30 in the 4s to $20.85 in the latest model, a significant reduction.

Another revelation is that the chips powering the new iPhone communications are sourced from primarily U.S. based suppliers including Qualcomm, Avango Technologies, TriQuint Semiconductor and Skyworks Solutions.

Bob Ferrari