Why The iPad Mini Doesn’t Sell For $199

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Premium parts don't come cheap.
Premium parts don't come cheap.

The iPad mini is Apple’s answer to smaller Android tablets from the likes of Amazon and Google. But there’s a good reason why it doesn’t come with the same $200 price tag. A teardown has revealed that the new iOS device costs at least $188 to build, and that price rises when you add bigger storage options and 4G connectivity.

Analysts at research firm IHS, previously known as iSuppli, have torn apart Apple’s iPad mini — not for the first time — and found that the entry-level 16GB device costs a minimum of $188 to build. The 32GB model costs an additional $31, while the 64GB model costs an additional $64.

Add 4G to the mix and the iPad mini is even more expensive to build. However, it’s not clear at this point just how expensive without a 4G model to pull apart.

Taking those prices into account, then, it’s clear why Apple cannot sell the iPad mini from $199 to compete with the Nexus 7 or the Kindle Fire HD. Once you add in other costs involved with the device — such as marketing, shipping, packaging, and more — the Cupertino company would see very little profit from its tiny tablet.

IHS also found during its teardown that the iPad mini’s 7.9-inch display, supplied by LG Display and AU Optronics, accounts for about 43% of the bill of materials (BOM) for the device at $80. According to its report, the panel uses a new technology known as GF2, which allows the display to be thinner than previous iPad displays.

However, that technology also pushes the cost of the display up a little bit. All Things D reports:

Andrew Rassweiler, an IHS analyst and head of the company’s teardown team, says that the new technology is proving somewhat problematic to manufacture, which is, for the moment, driving costs on the display up. But as kinks in the manufacturing process are worked out, those costs will come down.

The iPad mini’s memory chips, supplied by Elpida, cost around $15.50, according to IHS.

Samsung still produces Apple’s A5 processor for the iPad mini, but Apple is avoiding the Korean company’s components wherever it possibly can, IHS reports. Other components are supplied by Cirrus Logic, STMicroelectrics, Broadcom, Murata, and more.

Via: All Things D