IPhone 4 up on lower costs

Apple will generate higher profit margins on its latest iPhone 4 as it aligns its hardware costs closely with those of the previous iPhones at $187.51, according to a study.

The iPhone 4's design may be radically different, but the strategy remains the same, with the latest member of the product line carrying a Bill of Materials (BOM) or hardware costs that should continue to generate high profit margins for Apple, according to iSuppli's Teardown Analysis service.

BOM accounts only for hardware costs and does not include other expenses such as manufacturing, software, marketing, distribution and royalties and licencing fees.

The 16Gbyte version of the iPhone 4 carries a BOM of $187.51, based on a preliminary cost estimate derived from a physical teardown of the product.

"Just as it did with the iPad, Apple has thrown away the electronics playbook with the iPhone 4, reaching new heights in terms of industrial design, electronics integration and user interface," said Kevin Keller, principal analyst, teardown services, for iSuppli.

"However, the BOM of the fourth-generation model closely aligns with those of previous iPhones. With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve—one whose size is exceeded only by Microsoft."

iSuppli estimated the BOM of the 3GS in 2009 at $170.80; the 3G in 2008 at $166.31 and the first iPhone in 2007 at $217.73.

One of the most apparent examples of the iPhone 4's design innovation is its completely redesigned housing. Unlike the unibody housing of previous models, the iPhone 4's enclosure is composed of multiple pieces, allowing it to accommodate a considerably larger battery as well as the much-discussed integrated antenna.

Foxconn to move plant

Taiwan high-tech giant Foxconn plans to shift part of its production of Apple gadgets to other parts of the country as it faces rising labour costs, reports said.

After a run of suicides and wage hikes, Foxconn will move some manufacturing from Shenzhen to northern Tianjin and central Henan province, the Financial Times said, citing unnamed executives. The company – which also makes products for Panasonic, Dell, Nokia and other top brands – will boost its "investment and product portfolio" in Tianjin, the China Daily said. The move away from its long-time manufacturing hub in Shenzhen, on the border with Hong Kong, is aimed at containing rising costs, the Financial Times said.

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