iPhone manufacturing costs revealed?
An
unprecedented peek behind the curtain of Foxconn's factories in China
may have revealed new hints to how much it actually costs to make each
iPhone.
ABC's
"Nightline" was recently given access to the factory floor, and the
resulting reporting has provided some new insights into exactly how
iPhones are built, a part of the gadget's gestation process that's
typically been a very closely guarded trade secret.
Horace
Dediu, blogger, analyst, and former business development manager for
Nokia, tried to parse some of the clues and came to some interesting
conclusions.
Dediu
took two key revelations from the "Nightline" report--that each iPhone
takes 24 hours to be built, including 6 to 8 hours of software and
component "burn-in" and testing, and that workers on the line make $1.78
an hour.
He
then ran that information through some calculations to come up with a
new cost range for the labor it takes to make each iPhone, and found the
following.
Those costs are likely to range between $12.5 and $30 per unit.
Labor costs are still a small part of the overall cost structure at between 2 percent and 5 percent of sales price.
The
high level (141 steps) of human interaction in the process could be
automated. However, the fact that it isn't implies that the cost of
automation would be higher and the flexibility of the automated process
would be lower.
Dediu
adds that these manufacturing costs are likely much higher than
competing devices--perhaps as much as 300 percent--due to the intensity
of the design and quality testing. They're also higher than previous
estimates of iPhone assembly costs, which have been pegged as low as $8
per unit.
For a
little added perspective, even if the labor costs per phone are on the
high side of the range at $30, twice that amount per unit is likely
allocated to transportation and warranty expenses.
In
other words, when you spend hundreds on an iPhone, it's possible that
more of those dollars are going toward a promise on paper you probably
won't use (the warranty) than to the people who actually put the thing
together.
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