Upgraded Components in iPhone 6S Plus Costs Apple an Extra $16 Per Device

IHS Teardown Analysis: New iPhone 6S and 6S Plus Offer Improved
Durability for Longer Life and Improved Re-Sale Value

EL SEGUNDO, Calif.–(BUSINESS WIRE)–Upgraded components in the new iPhone 6S Plus cost $16 more than the
components in the earlier iPhone 6 Plus. The bill of materials (BOM) for
an iPhone 6S Plus equipped with 16 gigabytes (GB) of NAND flash memory
costs $231.50, according to a preliminary estimate from IHS
Inc. (NYSE: IHS), the leading global source of critical information
and insight.

After basic manufacturing costs are added, Apple’s total cost to
manufacture the iPhone 6S Plus rises to $236. The unsubsidized price for
a 16GB iPhone 6S (with a 4.7-inch diagonal screen) is $649, while the
unsubsidized price for the 16GB iPhone 6S Plus (with 5.5-inch diagonal
display) is $749.

“3D Touch and Apple’s Taptic engine are among the more notable feature
upgrades found in this latest round of iPhones,” said Andrew
Rassweiler, senior director of cost benchmarking services for IHS
Technology. “With each generation the company makes measured,
incremental technology improvements to its iPhone line, and this time
around those changes are increasing Apple’s per-unit material cost.”

Improved durability
Possibly due in part to Apple’s new
iPhone financing program, the new iPhone 6S and 6S Plus are designed to
be stronger and more resilient, which means it can last longer and
better maintain its resale value. Several upgrades combine to effect
this improvement, including a harder 7000-series aluminum case, an
upgrade to the latest and strongest Gorilla Glass 4 cover glass, as well
as additional gaskets and seals that improve water resistance.

Processor upgrade
Apple has upgraded the core processor,
from their A8 series to the more powerful A9 series Apple touts as
having a 70 percent faster CPU performance. The processor also
integrates M9 motion co-processor functionality. The previous generation
iPhone 6 and 6 Plus featured an A8 processor, as well as an M8 motion
co-processor that was a separate integrated circuit supplied by NXP
Semiconductor. In this new generation, the M9 exists within the A9
processor, and the stand-alone integrated circuit is no longer needed to
perform this function.

3D Touch and the Taptic Engine
Apple’s proprietary Taptic
Engine, a system also found in the Apple Watch, is a haptic user
interface technology that uses vibratory solenoid to reproduce physical
a vibration or tapping sensation when the device is touched. “The 3D
touch system is novel, and when combined with Apple’s Taptic Engine,
these features add about $10 to the total bill of materials cost,”
Rassweiler said. “Haptic systems are fairly low-tech and forms of haptic
feedback like this have been implemented for years in other devices
using traditional vibration motors, but the iPhone’s implementation of
this feature is unique.”

Improved wireless modem and WiFi
The iPhone wireless modem
has evolved from a CAT 4 (Qualcomm MDM9625) to a CAT 6 (Qualcomm
MDM9635) modem that provides better data throughput. Furthermore, like
preceding iPhone designs, the iPhone 6S and 6S Plus feature support for
a number of total long-term evolution (LTE) bands in a single device,
allowing Apple roll out its products globally, without other physical
variations to the wireless section of its devices. “Apple distinguishes
itself by supporting all wireless bands in a single hardware version of
the iPhone, which really helps Apple avoid having to manage so many
different variations of the iPhone 6S line,” Rassweiler said.

For the first time in an iPhone, Apple is using WiFi/WLAN with 2×2 MIMO,
which has been implemented previously in other smartphones, including
the Samsung Galaxy S5. Multiple input and multiple output (MIMO) antenna
design helps improve WiFi reception and performance speed.

Upgraded cameras
Apple has upgraded its main camera from 8
megapixels (MPs) in its earlier iPhone 6 to 12 MPs in the new iPhone 6S
and iPhone 6S Plus. The front-facing camera has also been upgraded from
1.2 MP to 5 MP. “These are major upgrades for the iPhone, which has
often lagged behind other leading edge flagship phones, where camera
resolution is concerned,” Rassweiler said. “Apple’s focus has always
been on image quality and camera speed over megapixels, but the iPhone
is now on par with its rivals, in this regard.”

Extended battery life
The battery in the iPhone 6S Plus is
slightly smaller than the battery in the earlier iPhone 6 Plus; however,
Apple has added new power-saving software features, as well as improved
power-management components and silicon process shrinks (e.g., a
processor built using the 14nm or 16nm or process nodes typically uses
less energy and current than a processor built in 20nm node).

NAND flash memory
As NAND flash memory continues to make up
an ever-smaller percentage of overall BOM costs, its monetization
continues to increase Apple’s profits. A 16 GB flash memory now costs
Apple less than $6 per unit.

“NAND Flash is now so cheap it’s almost irrelevant, but Apple monetizes
this difference with consumers, to the tune of $100 for each additional
step up in memory capacity,” Rassweiler said. “For example, a 64 GB
iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but
Apple charges iPhone buyers $100 more for the increased memory. This is
part of Apple’s ongoing strategy to improve profits by selling a product
mix that is heavier in the higher-end iPhones.”

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