iPhone manufacturing costs exposed?
Insight into the manufacturing process at Foxconn factories have allowed Horace Dediu to estimate the manufacture cost of an Apple iPhone smartphone.
Dediu, an analyst and former business development manager at Nokia, based his calculations on information gathered from the “Nightline” show on ABC.
ABC reported that each iPhone takes 24 hours to build, including 6 to 8 hours of software testing and component “burn-in”.
The show also reported that the workers on the production line make $1.78 (R13.76) per hour.
After processing the information, Dediu found the following:
- Labour costs to make an iPhone unit are between $12.5 (R96.66) and $30 (R231.98) per unit.
- Labour costs only account for between 2 and 5 percent of the overall cost structure.
- The manufacturing process could be automated, however the costs of implementing automation would be high, and there would be less flexibility in the automation process.
Previous estimates have pegged the iPhone manufacturing cost at $8 (R61.86) per unit.
Analysts also note that transportation and warranty expenses cost nearly twice as much as the upper end ($30) manufacturing estimate.
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