Everyone knows Apple products and iPhone devices aren’t cheap. New Apple products range in price from over $250 to over $1,000. But how much does the iPhone cost to make, and how much is Apple pocketing?
The latest model iPhone at any given time usually has several configurations ranging in price from $999 to $1,699. The components of an iPhone are typically estimated at ~$570. Apple may profit from $400 to $900 per device. These estimates don’t include labor, distribution, R&D, etc.
You’re not alone if you think the iPhone is expensive or that you may be overpaying for the device. Although Apple products have several advantages, affordability typically isn’t one of them. In the article below, we cover everything you need to know about the costs of building an iPhone.
What is the Actual Manufacturing Cost of an iPhone?
Apple’s latest model, the iPhone 13, comes in several models and configurations. Some models, like the iPhone 13 Pro, cost between $999 and $1,499. Although the retail price is expensive, the device may only cost around $570 to manufacture.
However, this number varies depending on the model and only factors in the cost of components. But as you can see, iPhones may not be as expensive to build. So here’s a deeper look into an iPhone’s manufacturing, development, labor, and distribution costs.
The Cost of Components
The cost of components and materials varies depending on the iPhone model. As you might expect, developing older models and variants with less storage space costs less. However, the iPhone 13 components cost roughly $570, and the iPhone 12 Pro components come to around $550.
The hardware and materials of an iPhone include the screen, battery, memory, cameras, chips, processors, sensors, housing, and more.
Labor Costs and Wages
The iPhone is mainly assembled in China by Taiwanese facilities like Foxconn and Pegatron. The average salary for an iPhone assembler is around $10 an hour, while top earners make roughly $27 per hour. Those in the 25th percentile earn approximately $12 an hour for their labor.
Although these wages may seem low to western countries, there are several undeveloped regions across China. The more significant issue is these workers’ working conditions over the years.
Research and Development Costs
One of the main costs of making an iPhone is research and development (R&D). Research and development include testing, certifications, components, designs, and more. Apple spent $18.75 billion on R&D in 2020, roughly $2.5 billion more than in 2019. Furthermore, most prototypes will never be revealed to the public.
On top of that, Apple pays engineers and software developers hefty salaries to create innovations. The average wage at Apple ranges from just under $30,000 per year for Specialists to nearly $200,000 for expert Machine Learning Engineers. Including these costs alongside other variables shows how expensive R&D becomes.
Distribution Costs
Although it’s hard to find specific distribution prices, shipping components and finished products aren’t cheap. For example, Apple sold 230 million iPhones in 2020 alone, meaning 230 million devices were built and shipped across the globe.
Shipping 230 million devices isn’t an easy or affordable feat. Distribution prices quickly increase by including components, transportation, warehouse facilities, and labor costs.
How Long Does it Take to Manufacture an iPhone?
It’s hard to gauge how long it actually takes to manufacture and assemble an iPhone. Some sources claim it takes 24 hours to build a fully functional iPhone.
However, some facilities can produce over 500,000 devices per day, meaning it may not take as long to assemble an iPhone as you might think.
Some Facilities Assemble 350 Devices a Minute
One of the most prominent iPhone assembling locations is the Foxconn facility in Zhengzhou, which covers 2.2 square miles and employs upwards of 350,000 employees. According to one source, there are 94 production lines at the manufacturer, and each device takes around 400 steps to put together.
These steps include polishing, drilling, fitting components, and more. The Zhengzhou location can produce 500,000 iPhones daily, or approximately 350 every 60 seconds.
Installing Software May Take 6-8 Hours
Each fully assembled iPhone must undergo software installations and tests to ensure it’s working correctly. However, tests aren’t limited to software, as the components and hardware will likely receive assessments.
Each device may take six to eight hours to finish, but these ranges haven’t been confirmed.
These Numbers May Not Be Accurate
It’s hard to say how long it takes to manufacture and assemble an iPhone, especially without official statements from Apple or partnered companies. It may take less than a day to make an iPhone, including assembly, installing software, and running tests. However, these timeframes don’t include the months or years of R&D for each device.
Wrapping Up
So, how much does the iPhone cost to make, and how does this compare to its retail price? Well, it’s hard to say for sure, but the iPhone 13 costs roughly $570 in components and costs anywhere between $1,000 and $1,500. So, with these price points, Apple is profiting from $400 to $900 per unit.
These numbers may not be accurate when you include labor, distribution, research, and other facts. However, it’s plain that Apple makes a pretty penny per device sold.