Apple has managed to keep production costs for the iPad 2 in line with that of the first-generation iPad, according to a teardown of the latest device by IHS iSuppli.
According to the company’s analysis, the 32GB GSM version of the iPad 2 sported a bill of materials (BOM) of $326.60. The 32GB CDMA version of the iPad 2 carries a BOM of $323.25. That’s in comparison to the first-generation 32GB 3G iPad, which carried a BOM of $320, based on pricing from April 2010.
When manufacturing costs are added, the cost to produce the GSM/HSPA version rises to $336.60, and the CDMA version goes to $333.25.
Andrew Rassweiler, senior director and principal analyst and teardown services manager for IHS, said the component and vendor selection in the second-generation iPad 2 closely conforms with that of the original iPad.
“Despite the obvious changes to iPad like the enclosure and the battery and the less obvious changes in the touch screen, the iPad 2’s components and design are remarkably similar if not the same as those of the iPad 1,” Rassweiler observed.
The iPad 1 and iPad 2 use the same components and suppliers for the NAND flash, the multi-touch controllers and touch screen drivers, as well as the same core chip in the wireless section as was found in the iPhone 4, Rassweiler said. Many of the other components, including the apps processor and the Bluetooth/frequency/global positioning system/wireless local area network chips, have the same suppliers and are essentially new revisions of the chips found in the previous iPad and other iPhones.
The touch screen in the iPad 2 has been modified and updated in the iPad 2, but the LG Display appears to be the same. IHS estimates the display and touch screen subsystem in the iPad 2 costs $127 compared to their initial $95 estimates for the iPad 1, based on pricing from April 2010. The company said that the difference in cost between the two devices is due almost entirely to the cost of the touch screen.
IHS concludes that the reason for the increase comes in large part from manufacturing challenges that the touch screen manufacturers have experienced since beginning production, including low production yields that drove up prices on the displays, as well as refinements such as more expensive glue to improve the efficiency/performance in the bonding and a thinner Gorilla cover glass and more detailed inspection process requiring additional equipment for optical and panel examination.
According to a report issued by DisplaySearch today, touch screen shipments for tablet (or slate) PCs are forecast to reach 60 million units in 2011. The report concludes that Apple will likely continue to account for the majority of tablet PC touch screens in 2011 and 2012, yet other brands could catch up in 2012 and beyond.