iPad 2 BOM totals $326.60

El Segundo, Calif. — The second generation iPad from Apple Inc. costs nearly the same as the first generation device, according to IHS iSuppli’s teardown analysis. The 32-GB NAND flash memory version of the iPad 2 equipped the with Global System for Mobile Communications/high-speed packet access (GSM/HSPA) air standard carries a bill of materials (BOM) of $326.60.

The 32-GB version equipped with the code division multiple access (CDMA) air standard carries a BOM of $323.25. The compares with $320 for the first-generation 32GB 3G iPad, based on pricing from April 2010, said IHS iSuppli.

When manufacturing costs are added, the cost to produce the GSM/HSPA version is $336.60, and $333.25 for the CDMA version.
The component and vendor selection in the second-generation iPad 2 nearly matches the original iPad, according to IHS iSuppli’s teardown. The analysis also indicates that while the touch screen has been modified the LG Display appears to be the same, but the display and touch-screen subsystem costs are much higher –$127.00, compared to the market researcher’s initial $95.00 estimate for the iPad 1, based on pricing from April 2010.

IHS iSuppli attributes the higher touch screen costs to production yield challenges, which drove prices to be much higher than initially expected, and improvements in the touch-screen specs such as “more expensive glue to improve the efficiency/performance in the bonding, thinner Gorilla cover glass and a more detailed inspection process requiring additional equipment for optical and panel examination.”

For the GSM/HSPA iPad 2, Apple is using the same wireless baseband/radio frequency/power amplifier solution from Infineon — now owned by Intel — as is used in the iPhone 4 (GSM/HSPA version). The iPad 2 also uses the same Intel chipset used in the iPhone 4 GSM/HSPA version.

For the CDMA version of the iPad 2, it is assumed the chips and components from the CDMA version of the iPad 2 are those used in the iPhone 4 CDMA, reported IHS iSuppli.

The A5 processor in the iPad 2 costs 75 percent more than the A4 processor in the iPad 1, based on improvements in performance and inherent design changes, said IHS iSuppli.

The analysis also reveals that the iPad 2 uses an improved and more expensive battery compared to the iPad 1. The iPad 2 battery costs $25.00, compared to $21.00 for the iPad 1. In addition, the iPad 2’s battery is much thinner than the iPad 1’s and uses three cells, rather than two. These batteries use special battery and power management circuitry, which is how Apple is able to maximize battery lifetime while minimizing size and weight, said IHS iSuppli.

The total thickness of the iPad 2 is 8.8 millimeters, down 34 percent from 13.4 millimeters in the iPad 1, and weighs about 600 grams, down 15 percent from 700 grams for the iPad 1.

Kevin Keller, principal analyst for the IHS iSuppli Teardown Analysis Service, said the biggest reduction in thickness came in the iPad 2’s battery subsystem. This section in the iPad 2 is 2.5 millimeters thick, a 59 percent reduction from 6.1 millimeters for the iPad 1, he said.

Another factor contributing to the thinner form factor was the elimination of a stamped sheet metal frame from the display, which cut the size of the display subsystem to 2.5 millimeters, down 17 percent from 3 millimeters for the iPad 1, said Keller.

On the touch-screen overlay, Apple also adopted a new glass technology that allows it to reduce the thickness of the section while maintaining durability. The touch screen overlay on the iPad 2 is 0.6 millimeters thick, down 25 percent from 0.8 millimeters for the iPad 1.

The iPad 2 also slightly trims the space between the rear of the display and the top of the batteries, from 1.6 millimeters in the iPad 1 to 1.3 millimeters in size.