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iPhone 7 teardown shows why it’s so expensive

A teardown of Apple’s new iPhone 7 by IHS Markit has revealed that it’s nearly $40 more expensive for Apple to make than the iPhone 6S.

The estimate – emphasis on estimate here – by IHS says that a 32GB model costs $224.80 (or $219.80 just for materials, plus $5 for labour), making it $36.89 more expensive than the teardown of the 6S.

Interestingly, the iPhone 7’s biggest jump in base cost comes from increased storage options, up to 256GB, and its new jet black colour option.

“Despite significant cost erosion in NAND flash over the last year, this increase in the overall memory cost definitely puts pressure on the bill of materials costs — and therefore margins — from Apple’s perspective,” says Andrew Rassweiler, senior director of cost benchmarking at IHS Markit.

Rassweiler also noted that the increased overall bill of materials is more in line with Apple’s key competitor Samsung, but added that while Apple’s costs have increased for the iPhone 7, it still has a larger margin per handset than Samsung.

It’s also a figure that’s likely to fall for Apple as it simplifies its processor setup in the future, IHS argues.

The 32GB iPhone 7 retails for $649, so don’t feel too badly about rising costs for one of the world’s richest companies. IHS Markit hasn’t yet carried out a cost teardown of the iPhone 7 Plus.

Related: iPhone 7 review in progress

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Are you buying an iPhone 7? Is it just too expensive to consider? Let us know below.

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