It Costs Apple About $275 to Build the Base Model iPad Air 2

It costs Apple about $275 to build its base model 16GB Wi-Fi iPad Air 2 that sells for $499, according to IHS iSuppli. The top-end model, the 128GB Cellular iPad Air 2, costs about $358 to build and sells for $829. That's about the same as it cost the company to build its predecessor, with slightly lower profit margins, notes Re/code.

Apple’s implied profit margin on the iPad Air 2 has dropped slightly to a range for 45 percent to 57 percent depending on the device, compared with the original at 45 percent to 61 percent. Apple doesn’t disclose the profit margins on individual products, though it reports a total gross margin of 38 percent. It also doesn’t comment on teardown reports.

The most expensive components inside the iPad Air 2 are associated with the display. At $77 it accounts for 28% of total component cost but it's cheaper than the display in the previous generation which cost $90.


“It’s basically the same display from before, the same size, the same resolution, but with an anti-reflective coating added,” IHS analyst Andrew Rassweiler said.

He also notes that Apple shifted some but not all A8X chip production to TSMC and away from Samsung.

The combined cost of the front and back cameras is $11.

As usual Apple makes most of its profits on the higher end models. The company spends about $9.20 for 16GB and $60 for 128GB; however, it charges $300 more for the higher memory model. “Apple reaps a pretty good profit for all that memory,” Rassweiler says.


The full report should be released later today.

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