executives on Monday warned that profit margins on the new Apple Watch in the current quarter would be lower than the company average. But an analysis released Thursday suggests the parts and manufacturing costs of the Watch are a smaller share of the retail price than other Apple products.
Technology estimated the costs of parts and manufacturing for a 38-millimeter Apple Watch Sport, the cheapest version available, total about $83.70. The watch sells for $349.
That 24% ratio for parts and manufacturing is lower than the 29% to 45% ratio the firm estimates for other Apple devices. IHS said the total bill of materials for the Watch Sport is $81.20 and that manufacturing costs add about $2.50 per watch.
IHS developed its estimate after taking apart a Watch and pricing the parts. The firm has done the same with the iPhone 6 and other gadgets.
Inside the Watch, IHS found a touch screen supplied by TPK Holding Co.
and a display module from Analog Devices Inc.
Apple manufacturers the S1 processor, while Toshiba Corp.
and Micron Technology Inc.
supplied the memory chip. The Bluetooth controller comes from Broadcom Corp.
, IHS said.
By comparison, IHS said parts and labor for the iPhone 6 cost $201.01, or 31% of the $649 price. For the iPhone 6 Plus, which has a larger battery and larger display, parts and labor total $219.89, or 29%, of the $749 retail price.
IHS said its estimates don’t take into account capital, logistics, research and development, intellectual property or other supply chain costs.
Write to Nathan Olivarez-Giles at [email protected]