The iPhone 7 is expensive for Apple, too

iPhone 7 IHS
iPHone 7 IHS

You think that Jet Black finish comes cheaply? It turns out the iPhone 7 isn't just breaking the bank for smartphone buyers - it's costing Apple a pretty penny too.

A teardown by IHS Market estimates the overall component cost of the iPhone 7 to be $224.80, a price that also includes basic manufacturing costs. That's $36.89 more than IHS Market listed the iPhone 6S at, which goes someway to explaining the iPhone 7's $649 (£599, AU$1,079) price tag.

Where that money goes

The jump to 32GB of storage as standard has obviously hit Apple's pocket, jumping up from the previous 16GB entry level.

"Despite significant cost erosion in NAND flash over the last year, this increase in the overall memory cost definitely puts pressure on the bill of materials costs -- and therefore margins -- from Apple's perspective," Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit, said.

Even the Jet Black finish itself is costly for the company.

"This is a new feature that produces a whole new look for the iPhone," said Wayne Lam, principal analyst of smartphone electronics, IHS Markit. "It is a lower yielding, time-intensive manufacturing step that adds cost, as well as considerable value, pushing the retail price higher for those requesting this option."

However, Apple's materials cost is said to be "in line" with that spent by Samsung on its rival flagships like the Galaxy S7 and Galaxy Note 7 (recall not withstanding). And Apple "still makes more margin from hardware than Samsung," according to Rassweiler.

IHS has yet to do a cost estimate on the iPhone 7 Plus, but given its dual-camera array and larger screen size, it'll be interesting to see how Apple's margins line up on the top-of-the-line handset.

Gerald Lynch

Gerald is Editor-in-Chief of Previously he was the Executive Editor for TechRadar, taking care of the site's home cinema, gaming, smart home, entertainment and audio output. He loves gaming, but don't expect him to play with you unless your console is hooked up to a 4K HDR screen and a 7.1 surround system. Before TechRadar, Gerald was Editor of Gizmodo UK. He is also the author of 'Get Technology: Upgrade Your Future', published by Aurum Press.