16GB iPad components estimated to cost Apple $219

By Slash Lane
Wednesday, February 10, 2010, 06:55 am PT (09:55 am ET)

Parts for Apple's forthcoming iPad, which will retail starting at $499, are estimated to cost the hardware maker as little as $219.35, a new analysis has calculated.

iSuppli Corp. said the multi-touch 9.7-inch display on the iPad could cost around $80, while its custom-designed A4 processor, believed to be manufactured by Samsung, would cost about $17 per unit —$2 more than the chip that lies in the iPhone 3GS. In addition, the 16GB of memory is estimated to cost about $29.50.

With a total parts cost of $219.35, that's well below the starting price of $499 for the 16GB iPad, which does not offer 3G connectivity. Factoring manufacturing costs add just $10 to the total cost of the low-end model, bringing it to $229.35.

However, the $499, 16GB model is also predicted to be the least profitable version of the hardware for Apple to sell.

iSuppli projects Apple will earn the most from selling the 32GB version with a built-in 3G radio, which will sell for $729. The combined materials and manufacturing costs for that model is estimated to cost Apple just $287.15.

The findings lend support to a recent report that Apple could lower the price of the iPad if initial sales are not as strong as the company hopes. That information was revealed this week after executives from the Cupertino, Calif., company allegedly told one analyst. Management allegedly said it "will remain nimble" in pricing the iPad.

Arguably the biggest surprise of the iPad's unveiling was its $499 starting price. Previously, analysts had expected the new touchscreen tablet to cost around $1,000.

3G connectivity on the hardware carries a $130 premium, making the 16GB model $629. The iPad will offer up to 64GB of capacity which, when paired with a 3G radio, will make the device cost $829 at its highest price. The 64GB of capacity will cost Apple an estimated $118 per unit, iSuppli said.

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