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Guess how much it really costs to make a smartphone

We all know that smartphones can be expensive, with some devices costing upwards of 1000 USD. But how much does it really cost to make a smartphone? Join us as we delve into the Android and iPhone innards to discover the profit margins and expenses in smartphone manufacturing.

MONEY photo wallet ANDROID AndroidPIT
How much does it really cost to make a smartphone? / © ANDROIDPIT

How much does a smartphone cost to make?

Research company IEEE has produced a chart which measures the real cost of each smartphone component. In this case, Apples's iPhone and the Samsung Galaxy S range are compared. Check out the image below.

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Here we see the shredded costs. / © IEEE

If we look closely at the data you can see that the iPhone 6 was the most expensive device that Apple has produced at 228 USD. For Samsung, it's the Galaxy S5 at 215 USD. 

Thanks to this graph, we can also see that the three most expensive aspects of each handset: the electronic and metal components, the display, and the processor (core electronics). These three components are currently where most of the manufacturing budget is spent, and it's been similar for the past three or four generations. The cost of the camera component, on the other hand, has grown in the last few years (as social apps, selfies and taking photos of food has grown in popularity too).

It may come as a surprise that the battery is not one of the biggest expenses when "good battery life" is arguably one of the most important factors among smartphone owners. But what you have to consider is that batteries are relatively cheap to manufacture and the technology behind them hasn't changed for many years. Since the Galaxy S, Samsung's batteries have largely only seen a change in capacity. 

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This tiny thing is a microprocessor, and it's worth a fortune. / © ANDROIDPIT

Are smartphone prices too high?

According to the above chart, a iPhone 6 costs approximately 230 dollars manufacture. A new, unlocked, 16 GB iPhone 6 costs 649 USD from the Apple store, representing a 280 percent profit margin on each handset sold (of course, it's not that simple, there are serious marketing and distribution costs to consider, but more on these other costs below).

Does such a profit margin seem justified? Yes, business is business, and a company that creates and sells a product wants to make money. But does it have to be sold for so much money? Of course not, but people buy it. The day you stop buying, the price will fall; this is supply and demand. 

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The Xiaomi E4 is a high-end smartphone that's far cheaper than what you would expect. / © AndroidPIT

The truth is, there are far more costs involved in smartphone production than simply component costs. Research & development, for example, comes at a huge price, with every smartphone manufacturer racing to release the best most impressive devices every year which must sell by the millions, or the company could be finished. 

But with processors coming from MediaTek and Qualcomm, and cameras coming from Sony, how much are other manufacturers even relying on R&D? Admittedly software costs money, and TouchWiz, Sense or any other interface requires people and resources to create, but whether this justifies the ultimate retail price isn't clear.

Regardless, modern society is willing to spend a fortune just to have the latest smartphone, and until that mentality changes, manufacturers will continue to do what they want and, above all else, what benefits them most, whether we like it or not.

What are your thoughts on smartphone pricing? Is the price we pay worth it for these awesome devices? Or is it far too high? Let us know in the comments below.

Originally written by Daniel Viejo for


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  • The answer really depends on the Smartphone manufacturer (and their in-house capabilities) and the Smartphone itself. The average when I was at BlackBerry a few years ago was closer to $300-$400 USD per smartphone, but that would have dropped now to around $200 USD.
    Take note of this is the cost of crude materials and does exclude the R&D expenses to concoct the imaginative equipment and programming that goes into the telephone, nor the promoting, operations and authoritative expenses to offer it.

    The Real Production of iPhone Development Companies -
    Smartphone Production Cost Retail Price
    Apple iPhone 5S (16GB) $199 $649
    Apple iPhone 5S (64GB) $218 $849
    Apple iPhone 5 (16GB) $207 $649
    Apple iPhone 4 (16GB) $188 $599

  • Tuan Do 7 months ago Link to comment

    The iPhones always have the lowest production cost and highest price according to this chart
    This is a joke

  • Thanks for posting such an informational blog!!! We often buy smartphones but never ever thought about the cost of making smartphones. Truly, by this blog you showed us the three most expensive aspects of each handset in which iPhone tops the chart. Yes, according the general viewers smartphones prices are high but after seeing the expenses behind making of smartphone the price is less as per the graphs. Great blog!!

  • This is just seductive but if you're comparing an iPhone to an Android you must be a dummy because only dummies use iPhones and iPhone users say Android people are dummies but we have open source so what do you think

  • jack lin Feb 22, 2015 Link to comment

    This is an old story. But as the author said, the price will go down when people stop buying it. iPhone is losing its customers here because most students and youngs cannot afford to pay once every year for new generation iPhones, and they are the major iPhone consumers here. Somehow, people will get cheaper iPhones soon.

  • For the Galaxy S5 it's worth it. The iPhone 6 though should cost half its current price.

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