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New iPad Costs At Least $316 to Build, Reduces Profit Margins By Over 20%

New iPad Costs At Least $316 to Build, Reduces Profit Margins By Over 20%

The folks over at iSupply have dissected the new iPad, analyzing its parts to determine how much it costs Apple to build the device, and what sort of profit margin they are making. Unsurprisingly, due largely to Apple’s inclusion of an ultra high resolution Retina display, the new iPad costs significantly more to make than the iPad 2 did at launch, cutting Apple’s profit margin by over 20%.

The new iPad is more expensive to produce than the iPad 2 at the time of product launch, even though the retail price points are the same. The 32GB LTE model’s BOM is nearly 9 percent higher than an iPad 2 equipped with 32GB and 3G wireless, which carried a cost of approximately $335 at the time of product launch. Major factors driving up the BOM include the addition of the high-resolution Retina display, LTE wireless and a larger-capacity battery.

Despite the somewhat reduced profit margin, Apple’s still making a fair bit of money off each device – just under $200 for the cheapest iPad, representing a 37% profit. While the larget iPads, such as the 64GB model with 4G LTE, nets over a 51% margin.

Other significant contributors to the increased cost of the device are the larger battery and the inclusion of a 4G LTE chipset.

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