The iPad 2 might cost the same as the first-gen tablet… but several components used to make it have actually increased in price: most notably, the price of the iPad 2’s touch display and the cost of manufacturing its new, dual-core A5 SoC.
The biggest component cost increase is for the touch display, which shot up almost $32 in price to $127, compared to the first-gen iPad’s $95 touch display.