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iPad component costs adjusted, estimated to cost Apple $260


With the iPad now in users' hands and its internal components revealed, iSuppli has adjusted its estimated cost to Apple for the 16GB Wi-Fi model higher, to $259.60, due to more silicon than it had anticipated.

That's more than $40 higher than a preliminary estimate provided in February, soon after the iPad was revealed. But the total is also well below the $499 starting price for the 16GB Wi-Fi iPad.

According to BusinessWeek, that total skewed higher once iSuppli saw the components of the actual product, because the shipping iPad includes more silicon chips than it expected. One example: the iPad uses three chips for control of the touchscreen.

That screen is the most expensive component in the device, costing $95. That total is up from the $80 assumed in February's estimate. The custom-manufactured LCD 9.7-inch IPS screens have been supplied by LG, Samsung and Epson. The special design of the iPad reportedly makes its display twice as expensive as that of a typical netbook.

Memory costs with the iPad amounted to $29.50 for the 16GB model, $59 for the 32GB model, and $118 for 64GB of storage. And the custom-built A4 processor is estimated to cost $26.80, up nearly $10 from the February projection of $17. And the rear case, machined from a single billet of aluminum, cost $10.50.

iSuppli estimated that the 32GB iPad, which sells for $599, includes $289.10 in materials, while the $699, top-of-the-line 64GB Wi-Fi iPad carries a cost of $348.10.

iSuppli principal analyst Andrew Rassweiler said that more than 40 percent of the costs of the iPad are associated to powering the touchscreen display and components of the user interface.

In February it was alleged 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 reportedly said it "will remain nimble" in pricing the iPad.

But with opening day sales of more than 300,000, exceeding the first-generation iPhone, Apple likely is not looking to reduce the price of the iPad. The 3G version of the hardware, which offers wireless connectivity through a cellular data subscription and carries a $130 premium, is set to arrive later this month.