iPad Air has lower BOM that 3rd-gen iPad Model, IHS assesses

November 06, 2013 // By IHS Staff
A teardown by analysts IHS reveals that with the iPad Air, Apple has not only trimmed the weight and thickness of its flagship tablet line, it has also cut the component cost, as the new model carries a lower bill of materials (BOM) than the third-generation iPad introduced last year.

The iPad Air with 16 GB of NAND flash memory and cellular connectivity has a BOM of $304, according to preliminary results from the Teardown Analysis Service at IHS. This represents a 6% reduction from $325 for an equivalently equipped third-generation iPad, based on a final pricing estimate for the device at the time of the release in 2012.

When the $6 manufacturing cost of the iPad Air is added in, the total cost to make the tablet increases to $310.

For the lowest-end iPad Air model with 16GB of NAND and no cellular connection, the BOM and manufacturing cost is $274, $42 less than the entry-level third-generation iPad.

“While the iPad Air slims down in size, the profit margins are getting fatter,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS. “Although the Air’s new, ultrathin display and touch screen are more expensive than for the third-generation iPad, Apple has held the line on cost by taking advantage of price erosion in other areas. Furthermore, the iPad Air leverages the same components and suppliers that are used in the iPhone 5s and 5c as much as possible.”

The profitability of the iPad Air rises dramatically as the NAND memory capacity increases. For example, the 32GB model costs Apple only $8.40 more to produce—but has a retail price that’s $100 higher.

The iPad Air’s thinner form factor is partly due to reductions in the thickness of the display and touch-screen subsystems. The Air’s display is 1.8 mm thick, compared to about 2.23 mm for the older-generation iPad. Meanwhile the touch screen is also thinner with its use of an expensive cyclo olephin polymer (COP) film sensor vs. the thicker and cheaper glass sensor used in the previous models.

Exploded, annotated view of the iPad Air (all photographs courtesy of and © IHS)

However, such elegance comes at a price, with both subsystems more costly than before. The iPad Air’s