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14
March
2011

The inner works of an iPad2

With the second-generation iPad, Apple has held the line on the bill of materials (BOM), maintaining virtually the same costs - USD 326.60 to be exact - as the first version of the device, an IHS iSuppli teardown analysis has revealed.
The 32GB NAND flash memory version of the iPad 2 equipped the with Global System for Mobile Communications/high-speed packet access (GSM/HSPA) air standard carries a BOM of USD 326.60. The 32GB version equipped with the code division multiple access (CDMA) air standard carries a BOM of USD 323.25. The compares with USD 320 for the first-generation 32GB 3G iPad, based on pricing from April 2010.

When manufacturing costs are added, the cost to produce the GSM/HSPA version rises to USD 336.60, and the CDMA version goes to USD 333.25.

(Media Not Available) © IHS iSuppli

The touch screen in the iPad2 has been modified and updated in the iPad2, but the LG Display appears to be the same, but the touch screen cost estimate is markedly higher, the IHS teardown specialist Andrew Rassweiler points out. The display and touch screen subsystem in the iPad 2 costs USD 127.00, compared to our initial USD 95.00 estimates for the iPad1, based on pricing from April 2010.

The difference is due almost entirely to the cost of the touch screen. The reason for the increase comes in large part from manufacturing challenges that the touch screen manufacturers have experienced since beginning production. Production yields, though they have been improving, has been very low throughout 2010, and drove prices to be much higher than initially expected.

Furthermore, refinements in the touch screen specifications have driven the price point even higher for the iPad2. Contributing factors to that cost increases include more expensive glue to improve the efficiency/performance in the bonding, thinner Gorilla cover glass and more detailed inspection process requiring additional equipment for optical and panel examination.

(Media Not Available) © IHS iSuppli / For the GSM/HSPA iPad2, Apple is sticking with the same wireless baseband/radio frequency/power amplifier solution from Infineon—now owned by Intel—as is used in the iPhone 4 (GSM/HSPA version). Because of the use of a Qualcomm solution used in the recent iPhone4 CDMA, IHS iSuppli had initially speculated that Apple might consolidate suppliers for wireless chips and use a Qualcomm solution in the iPad2 GSM/HSPA version.

Instead the iPad2 uses the same Intel chipset used in the iPhone4 GSM/HSPA version. For the CDMA version of the iPad2, it is assumed the chips and components from the CDMA version of the iPad 2 are those used in the iPhone4 CDMA, and IHS iSuppli has taken its wireless component list directly from our iPhone4 CDMA teardown analysis.

The A5 processor in iPad2 costs 75% more the A4 processor in the iPad 1, based on improvements in performance and inherent design changes. The A5 processor, whether produced by Samsung or another foundry, is based on Apple’s own designs.

(Media Not Available) © IHS iSuppli / Apple owns the intellectual property, and as such, whoever builds the A5 processor for them is doing so as more of a foundry service—like a contract manufacturer—which gives Apple a huge competitive cost edge on the piece price of these processors. At USD 14, the A5 processor costs 75% more than the current A4 processor. The cost of this processor is expected to erode quickly over the course of the next year as Apple ramps production.

The iPad 2 employs an improved and more expensive battery compared to the iPad1. The iPad2 battery carries a cost of USD 25.00, compared to USD 21.00 for the iPad1. The iPad2’s battery is much thinner than the iPad1’s and uses three cells, rather than two. Apple never takes a standard approach with batteries and challenges its vendors to create unique solutions to accommodate their desired form factor.

(Media Not Available) © IHS iSuppli / Although other manufacturers are using similar flat pack batteries, these incredibly thin batteries, and special battery management circuitry just for Apple batteries, provide an exceptional result. Power management circuitry also plays a big role in the iPad2, as well as in iPhones and iPods, and represent a major part of how Apple is able to maximize battery lifetime while minimizing size and weight.
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Note: All photographs have a zoom function.
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