A teardown of the smartwatch recently introduced by Apple Inc. revealed the company called on many of its current component suppliers to provide components for the device. Winners of the company’s design sockets include Micron Inc., which provided the DRAM, and Toshiba Inc., which supplied the flash memory component.
IHS Inc. in a report said other suppliers of semiconductors for the Apple smartwatch include STMicroelectronics, which provided the accelerometer/gyroscope, replacing regular supplier Invensense, and Broadcom, Maxim, Analog Devices and NXP, all of which provided connectivity and interface components.
Suppliers of non-IC components for the smartwatch include Korea’s LG, which provided the OLED display, and TPK Holding, a supplier of the touchscreen overlay module used by Apple in its latest MacBook computer and likely to be incorporated into the next-generation iPhone, according to Kevin Keller, a senior principal analyst at IHS.
The IHS team said the smartwatch on a percentage basis has a better cost structure for Apple than its iPhones. The hardware cost of the Apple Watch Sport examined by IHS is about 24 percent of the suggested retail price of the device, compared with 29 to 98 percent for other Apple products, the reviewer said.
The Apple Watch Sport has a bill of materials cost of $81.20 – or $83.70 with the cost of production thrown in, IHS said. The device retails for approximately $349. IHS said it did not add other costs such as logistics, selling, general and administrative, research and development, IP licensing and other software charges to its estimate.
“It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost,” said Keller in the IHS report. “While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”