Supply issues estimated to drive cost of Apple's iPad 2 touchscreen up to $127Components for the touch display on the new iPad 2 are estimated to cost Apple $127 for each device, an increase of more than $30 from the first-generation iPad.
iSuppli has revealed its regular bill of materials estimates for Apple products with the launch of the new iPad 2. As reported by DigiTimes, the most expensive component is estimated to be the $127 touchscreen, which comes in at a projected price markedly higher than the company's $95 estimate for the first-generation iPad.
"The reason for the increase comes in large part from manufacturing challenges that the touch screen makers have been experiencing since beginning high production," the report reads. "Production yields, though they have been improving, has been very low throughout 2010, and drove prices to be much higher than initially expected."
Other factors that are said to have caused the increase in component costs include the use of more expensive glue to improve efficiency and performance in the bonding of the touch display. In addition, the new iPad 2 has a thinner glass cover believed to be Gorilla glass, and a "more detailed inspection process requiring additional equipment for optical and panel examination."
The new A5 processor in the iPad 2 is also estimated to cost 75 percent more than the A4 processor found in the first-generation iPad. The A5 currently costs a presumed $14 per unit, though iSuppli said those costs would "erode quickly" as Apple ramps production and likely includes the new chip in its fifth-generation iPhone.
In all, the 32GB GSM iPad 2 is estimated to have a bill of materials cost of $326.60, while the CDMA version is pegged at $323.25. For comparison, iSuppli estimated the Motorola Xoom, with equivalent 3G radio and 32GB of memory, to have a total bill of materials cost of $359.92.
iSuppli's bill of materials estimates are significantly higher than the conclusions reached by UBM TechInsights. That company's research pegged the total bill of materials for the iPad 2 at $270 for the 32GB 3G-capable model.
Last July, Apple executives called out companies that estimate component costs for its products. Apple Chief Financial Officer Peter Oppenheimer advised that investors should not "put a lot of credence in these third-party reports," noting that some cost categories and components "never seem to make it into the reports."