A UBM TechInsights preliminary breakdown of the new iPad’s costs has suggested Apple is at least taking a slight price hit to build it. It believed that a 16GB, iPad 4G model cost about $310 in raw components. While it represented a 51 percent margin over the $629 price before many other factors came into play, it was significantly less than an equivalent 3G iPad 2’s 56 percent margin when it was new in 2011.
Most of the cost would be in the 2048×1536 display. At $70, it would be noticeably more expensive than the $49.50 of the older 1024×768 screen. Apple’s near-universal LTE chipset might cost it $21 versus the $10 for a 3G chip in the earlier tablet. An A5X chip was given a rough estimate of $28 versus $22 for an A5.
Costs are likely to change at least slightly once groups such as UBM can directly analyze components, although they typically come relatively close. Apple could have a wider margin if it succeeds in getting better deals for the processor, 4G chipset, or other parts.
As always, the raw margin over components excludes several factors that lead to a considerably lower margin. The UBM figures don’t include assembly, shipping, marketing, or the research and development that can be attributed to each iPad. Apple is still expected to have a relatively large profit margin, although it’s this that has often been credited to its ability to aggressively develop new models and make some of the best profits in the industry.