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Wednesday, September 20, 2006, 03:35 pm PT (06:35 pm ET)

Firm offers teardown analysis of all three new nano models

Analysts for Wedbush Morgan Securities estimate that Apple's gross margins could be as high as 50 percent on its new line of aluminum anodized iPod nano digital music players.

Craig Berger, an analyst at the firm, recently told clients he believes Apple is set to see stronger gross margins with its new iPod nano this holiday season than it did last holiday season because of the large price decline in NAND flash memory this year.

"One year ago, the high-end Nano (still at the $249 price point) contained about $150 worth of NAND flash versus the high-end device of $92 today," he wrote. "That savings of $58 is driving an additional 23-points of gross margin [which is] good news for Apple versus its high-end Nano one year ago."

In his analysis, Berger points out that Apple is attempting to keep more secrets this time around with three suspiciously 'Apple'-marked chips inside the players.

"There were no 'Apple' marked chips in the first-generation Nano," he wrote. "We suspect one of these chips is the Samsung ARM processor (part #337S3291 8701), the socket formerly supplied by PortalPlayer. [...] We do not see the Wolfson audio driver chip or the Philips power management chip that was in the first-generation Nano, though Apple could have re-marked either of those chips." Indeed, a subsequent teardown by iSuppli confirms the three chips as belonging to Samsung, Wolfson and Philips, respectively.

Those changes aside, Berger said there are several chips that are either the same or similar to those employed in the first generation iPod nano, including Samsung’s 256MB SDRAM (K4M56163PG), Linear Tech’s USB power manager/battery charger, National Semi’s step down DC-DC switching regular (JM62SE), SST’s program flash memory (SST89WT800A) and Cypress’ click wheel interface controller (CY8C21434LKXI). He also noted that Hynix is co-supplying flash memory for the players alongside Samsung.

Wedbush Morgan 2G iPod teardown examples


Based on his analysis, Berger estimates Apple's bill-of-martials (BOM) cost to be $74.90 for the 2GB model, $97.90 for the 4GB model and $143.90 for the 8GB model. Without factoring other costs such as development, manufacturing, freight, and marketing, the analyst said his BOM totals imply gross margins of 49.7 percent, 50.8 percent and 42.2 percent, respectively.

Berger also recently dissected Apple's updated fifth-generation video iPod players.

Wedbush Morgan 2G iPod teardown examples


Wedbush Morgan 2G iPod teardown examples


Wedbush Morgan 2G iPod teardown examples