Teardown Shows iPhone 5S Costs at Least $199 to Build, $173 for the 5C
New iPhones always gladden the hearts of the analysts at the research firm IHS, because it means it's time to tear the phones apart. — This year's iPhone teardown project was twice as much fun …
Context & Ripple Effects
IHS has turned Apple launches into an annual accounting exercise: its analysts put the iPhone 4S bill of materials at $188 back in October 2011, then tore down the iPhone 5 a year later (September 2012). This cycle is the first with two phones to dissect at once — the premium 5S and the deliberately cheaper 5C — which is why the firm calls this teardown 'twice as much fun.'
The pickup is broad: iMore, MacRumors, eWeek, AppleInsider, TUAW and others all ran the same numbers on launch week, making the BOM estimate part of the standard launch-day narrative rather than niche supply-chain gossip. The figures matter because they let observers price Apple's margin structure on each model without Apple ever disclosing one.
First-order effects
- Apple's two-tier lineup now has published cost floors: roughly $199 for the 5S and $173 for the 5C, giving buyers and investors a concrete read on how much margin each model carries at retail.
- Component suppliers named in the teardown — the A7 processor, the Touch ID sensor, the camera stack — get their contribution to the cost structure quantified publicly, which feeds directly into negotiations over future design wins.
Second-order effects
- Rivals building against the 5C's mid-market pitch can benchmark whether a 'cheaper' iPhone actually costs meaningfully less to make, sharpening pricing decisions at Samsung and other Android vendors heading into the holiday quarter.
- The wide syndication turns the BOM into a recurring PR beat: every vendor launch now invites a teardown comparison, so component choices become marketing-visible rather than internal engineering detail.
Third-order effects
- If the pattern from 2007 through the 4S and 5 generations holds, third-party teardown estimates harden into the de facto public record of flagship phone economics, pressuring vendors to compete on value-per-BOM-dollar rather than spec sheets alone.
- The two-model split points toward tiered cost structures becoming permanent in smartphones — distinct BOM targets per price band instead of a single flagship design scaled up or down.
The trend: Flagship phone bills of materials keep climbing generation over generation while independent teardown firms institutionalize themselves as the public auditors of device economics.