Tim Cook told investors on Monday to not even try to guess how much Apple’s supply chain costs are, but that’s not stopping some analysts from trying to determine the cost of Apple Watch components
IHS Technology toredown the 38mm Apple Watch Sport this week, and according to the firm’s estimates, Apple’s $350 timepiece costs less than $85 for all the components.
During the teardown, IHS discovered that Apple Watch may have the lowest hardware costs compare to retail price of any other Apple product. IHS estimates that other Apple products’ hardware cost to MSRP ratio fall within the 29 to 98 percent range, but Apple Watch has a super low 24% ratio.
Those costs don’t account for all the money Apple loses faulty components that come through the supply chain, like the entire batch of Taptic Engines the company paid for from it’s supplier in China. It also doesn’t include the logistics, overhead, R&D, software, IP licensing and other costs associated with bringing the Apple Watch to the market, which surely push it above $100 per unit.
The priciest piece of hardware in the Apple Watch is LG’s tiny OLED display, which IHS estimates costs $20.50. The S1 processor runs around $10.20 per piece, while the 512GB of SRAM adds another $7.20 to the bill. As for the cheapest components, IHS’s experts says the little battery box that had fans so worried is dirt cheap at only 80 cents per battery.