Samsung Galaxy S4 Breakdown Reveals $237 Build Cost

[dgstorm]

The Samsung Galaxy S4 is the hottest new smartphone on the planet right now. The 16GB version sells in the range of $600-700 USD unsubsidized. The folks at market research firm IHS did a tear-down of the device to create a full breakdown of parts including pricing details. The results of their analysis shows the SGS4 costs Samsung around $237 USD to build (not including overhead and advertising).

When comparing this to the 16GB version of the Apple iPhone 5, we see that the Samsung cost a bit more to build, since the iPhone's build cost is around $205 USD. This is also more than it costs to build the Nokia Lumia 900, which clocks in at $207 USD. It comes in cheaper but fairly close to the price of the Samsung Galaxy Note, which has a build cost of approximately $270 USD.

It's also interesting, but unsurprising to note (no pun intended) that most of the components inside the SGS4 are supplied in some way by Samsung themselves. What is surprising is that Samsung pays itself more for the Exynos 5 Octa-core chip in the international version ($28) than it does for the Qualcomm Snapdragon 600 chip in the U.S. version ($20). Here's a quote with some additional info,

Most phone manufacturers source their components from many different suppliers. But Samsung, a large, diversified manufacturer of many different kinds of electronic components, has used its significant capabilities to supply itself with many of the key parts inside most versions of the S4 phone sold around the world.

“Samsung’s strength is this ability to in-source to itself,” IHS analyst Vincent Leung said in an interview. “They just keep adding to the list of components that they can supply to themselves.”

One key component that Samsung did not supply to itself for versions of the phone being sold in the U.S. was the main applications processor. U.S. versions of the phone contain a Snapdragon processor from Qualcomm, which contributes $20 to the overall cost.

Versions of the phone sold in Korea and other markets around the world contain a Samsung-made chip called the Exynos 5 Octa that costs $28. Samsung is known to be manufacturing at least four variations of the phone for different market geographies around the world, including at least two being sold in the U.S., one going to AT&T and T-Mobile, and another going to Verizon Wireless and Sprint, said Andrew Rassweiler, another IHS analyst.

“Samsung is demonstrating its ability to suit the tastes of carriers in different regions of the world,” Rassweiler said. “It comes down to what the market is willing to spend on the features offered.”

The fact that Samsung used the Qualcomm-made chip is a testament to the U.S. chipmaker’s prowess. “Even with all the vertical integration it’s doing, it’s not like Samsung has given up on Qualcomm,” Rassweiler said.

Source: AllThingsD

 

[kodiak799]

A few of us were debating this....$28 for 16gigs of internal memory.

Does that sound like a lot? Well, like many other parts in this phone, Samsung supplies itself. It's not wrong to do transfer pricing at retail, but besides overstating the actual cost no major OEM is paying retail for its parts.

In general, that applies to all these teardowns. $215 is overstating it when you are grabbing retail prices - I have no idea what bulk purchasing would actually cost on these things- 20% discount? 40% discount? You can price that IPhone at $215 of internal components, but it probably actually only cost Apple $150.

 

[52brandon]

A few of us were debating this....$28 for 16gigs of internal memory.

Does that sound like a lot? Well, like many other parts in this phone, Samsung supplies itself. It's not wrong to do transfer pricing at retail, but besides overstating the actual cost no major OEM is paying retail for its parts.

In general, that applies to all these teardowns. $215 is overstating it when you are grabbing retail prices - I have no idea what bulk purchasing would actually cost on these things- 20% discount? 40% discount? You can price that IPhone at $215 of internal components, but it probably actually only cost Apple $150.

that was $28 for the 16GB internal memory AND 2GB DDR3 chip. My guess is it's more likely around $15

 

[voodoodaddy]

$237...so why the $599+ retail cost on these? Id be much more likely to buy phones off contract at $300-350 vs $599 on up. With 6 lines on my plan its just not feasible for me to drop retail price on an upgrade to remain off contract.

 

[dfcfu342]

$237...so why the $599+ retail cost on these? Id be much more likely to buy phones off contract at $300-350 vs $599 on up. With 6 lines on my plan its just not feasible for me to drop retail price on an upgrade to remain off contract.

Because people will pay for them. If people stopped buying phones at that price they would come down. However they are still bought at that price and that trend is accelerating so there won't be a price drop anytime soon.

 

[kodiak799]

Because people will pay for them. If people stopped buying phones at that price they would come down. However they are still bought at that price and that trend is accelerating so there won't be a price drop anytime soon.

That's just the component costs, which could be a bit inflated. But it presumably does not include labor, definitely does not include R&D, marketing and other overhead.

It's interesting that they get about $250-$300 subsidy, which means somewhere in the neighborhood of $500-$600 on contract. But note that really only Samsung and Apple have been making money, so I'm not sure how much margin is really in these phones once all the costs are fully loaded.