Electronic Design

iPhone Adds 3G Functionality, Drops Cost

iSuppli – After a teardown of the iPhone 3G, iSuppli Corp. confirmed a significant drop in bill of material (BOM) costs, indicating a cheaper end product than last year’s 2G iPhone (see teardown). At $174.33, the BOM and manufacturing cost of the new iPhone is markedly less than the $227 that iSuppli estimated for the first-generation, 8 Gbyte 2G version in June 2007. This strip down results in about $100 less for consumers, totaling $499 for the iPhone 3G, whereas last year’s model called for $599.

While using a new design, the iPhone 3G really represents a refinement of the original iPhone 2G, according to iSuppli. “The addition of 3G wireless capability represents an evolutionary design step for the iPhone, not a revolutionary one,” said Andrew Rassweiler, teardown services manager and principal analyst at iSuppli. “iSuppli believes Apple aimed for a more cost-effective design for the 3G iPhone compared to the 2G, in order to lower the retail price—which will allow the company to seed adoption and to capture maximum market share now—while the company still has buzz and a perceived differentiation relative to its competitors.”

Infineon AG was the big winner in the key baseband section of the iPhone 3G torn down by iSuppli, contributing its HSDPA/WCDMA/EDGE chip that includes dual ARM926 and ARM7 microprocessor cores. Solely-sourced items include Infineon’s baseband solution, RF transceiver and Global Positioning System (GPS) devices; Samsung Electronics Co. Ltd’s applications processor integrated with Synchronous DRAM (SDRAM); Marvell Technology Group Ltd.’s WLAN device and Cambridge Silicon Radio’s (CSR’s) Bluetooth chip. Multi-sourced items include Toshiba Corp.’s 8Gbyte NAND flash memory chip. Apple’s other likely sources for this part include Samsung.

Upon examining the handset, iSuppli also notes that the redesigned internals of the iPhone 3G include only one large printed-circuit board (PCB), instead of the two nested PCBs found in the 2G version. Also, the 3G versions uses a 10-layer board, compared to the less-expensive six-layer PCBs commonly employed in mobile handsets. Other observations include a non-soldered battery and the placement of the Apple logo on chips or leaving them unmarked.

While there are variations in the components and suppliers for individual products, iSuppli believes that the vendors and parts identified in its teardown likely are representative of all iPhone 3Gs now being shipped—excluding certain memory devices and other commodity parts that are available from multiple sources. After completing an analysis of a larger sample of iPhones, iSuppli reports that it will issue further information to the public.

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