Teardown reveals iPhone SE is 3 iPhone generations rolled into one

The iPhone SE smartphone. The iPhone SE smartphone. APPLE

A preliminary estimate by IHS Inc.'s teardown and cost benchmarking service has discovered something rather interesting about Apple's new iPhone SE.

According to an estimate from IHS, is appears that the iPhone SE smartphone costs about $160 to build.  The U.S. version of an entry-level iPhone SE with 16 gigabytes (GB) of NAND memory carries a bill of materials (BOM) of $156.20, which rises to $160.00 when the manufacturing cost is added, according to results from the IHS teardown of a phone purchased from the Apple Store on March 31, 2016.  For reference, the retail price of the iPhone SE 16GB model is $399.

“The iPhone SE represents an amalgamation of three iPhone generations -- iPhone 5s, iPhone 6 and iPhone 6s -- rolled into something altogether new,” said Andrew Rassweiler, senior director of cost benchmarking services at IHS.  “Despite its physical resemblance to the iPhone 5s, the resulting product is far superior.  In fact, the only significant tradeoffs a consumer would make with the iPhone SE against the iPhone 6s is smaller size and lower screen resolution.”

The teardown also revealed that the iPhone SE borrows many of the same -- or at least extremely similar -- components from three previous phone generations.  The overall iPhone SE design envelope is very similar in to the iPhone 5s, which launched in 2013.  Rassweiler says the size and resolution of the display are the same between the iPhone SE and iPhone 5.  Some the mechanical components such as the enclosure, however, have been slightly modified.  As for the iPhone 6, the SE shares many of the same radio-frequency (RF) components used for LTE connectivity and uses the same Qualcomm (MDM9625) solution.  The iPhone SE also shares the iPhone 6 1.2 megapixel secondary camera.  The SE also uses the same A9 applications processor with dynamic random-access memory (DRAM) as the iPhone 6S to support interactive gaming and other processor-intensive applications.

Like with the Apple 5C, Apple is again extending its product range into the lower end of the cost spectrum. The company still aims to get consumers on the lower rung of the Apple-product ladder with the more affordable 16 GB Apple SE, knowing that many consumers will opt to pay for an iPhone with more memory.  IHS estimates that Apple makes approximately $89 in incremental profit for each iPhone SE 64GB sold when compared with the iPhone SE 16GB.

“Apple is willing to drop its gross margin on the low end to induce sales -- though it is likely counting on many consumers upgrading to the more profitable 64 gigabyte SE model,” said Wayne Lam, principal analyst, mobile devices and networks, IHS Technology.  “When the profit machine that is Apple capitulates to the market forces of a maturing industry, it shows its tacit acknowledgement that even it is not immune to the dynamics of the global smartphone slowdown.”

Apple's iPhone SE launched March 31.

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