iPhone manufacturing estimated to cost $30 per unit

Rue Liu - Feb 23, 2012
iPhone manufacturing estimated to cost $30 per unit

Curious how much your iPhone actually costs Apple to manufacture? Asymco analyst Horace Dediu claims that each iPhone costs about $30, and that's on the high side and greater than previous estimates of $8 per unit. His estimate was deduced from new details revealed by an ABC Nightline report that was given unprecedented access to the facilities of Apple's main manufacturing partner, Foxconn.

According to the ABC report, each iPhone takes 24 hours to produce, including 6 to 8 hours for component burn-in and software testing. The show also revealed that each worker on the production line makes roughly $1.78 per hour. The production process includes both human labor and some robotic automation, but the lack of more automation may be due to more cost and less flexibility.

With this information, Dediu calculated that labor costs for each iPhone would be between $12.50 and $30. However, this labor cost is a very small part of the overall cost structure for the iPhone, accounting for only 2% to 5% of the sales price. Dediu believes that Apple actually spends more on transportation and warranty expenses, as much as $60 per unit.

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