Step-Up in Storage Density on iPhone 7 Puts Pressure on BOM Costs, Says IHS

The $224.80 cost to build the iPhone 7 ($649) is $36.89 higher than IHS' analysis of the iPhone 6s performed in December, said the analytics company in a report. The bill of materials cost for the iPhone 7 is in line with IHS teardowns of recent high-end Samsung smartphones, said analyst Andrew Rassweiler. Compared with the iPhone 6s, the iPhone 7 has wider color gamut, including DCI-P3 and sRGB, said to improve rendering of photos and videos. The device’s haptic engine got a refresh for longer-duty cycles and better dynamic response, said IHS, and the home button is now static and mimics the MacBook’s solid-state button design. In place of the 3.5mm jack, Apple inserted a symmetrical grill for the waterproof microphone, “leaving more room for the larger battery and Taptic Engine,” said Rassweiler. The expansion to 32 GB base storage density, from 16 GB, is only the second time Apple has stepped up base storage in the iPhone, which is also available in 128 GB and 256 GB versions, he said. Overall memory cost “puts pressure on the bill of materials costs -- and therefore margins,” Rassweiler said. Apple eliminated segmented antenna bands, which means the company is pushing all radio-frequency paths to the ends of the phone, due to the aluminum unibody construction and design, said analyst Wayne Lam. “This design limitation may force Apple to go back to an all-glass design again so that they can fit in 4x4MIMO LTE antennas and more features like wireless charging in the next iPhone iteration.” The official water resistant designation is an evolution from the iPhone 6s, which has additional gaskets around critical connectors, Lam said. The jet black polish available on the 128 GB and 256 GB models is a “lower yielding, time-intensive manufacturing step” that adds cost and retail value, he said. The battery has been increased to 1960 mAh capacity from 1715 mAh in the iPhone 6s, “consistent with Apple’s claims of improved battery life,” said Lam. An analysis isn't yet available for the iPhone 7 Plus.