Apple is by far the most profitable smartphone OEM on the planet, and the folks at TechInsights have torn the smartphone apart to get an estimated build cost. Not surprisingly, the device is allegedly more expensive to build than last year's iPhone X. The mid-range 256GB SKU is estimated to cost $443 for the parts alone compared to $395 for last year's 64GB iPhone X.
Not surprisingly, the most expensive component of the iPhone XS Max is the 6.5-inch OLED display, which is estimated to cost $80.50 versus $77.27 for the iPhone X display. Apple was able to add a much larger display with very little increase in costs thanks to the removal of some 3D Touch parts. “All told, what they took out adds up to about $10, so this $80 estimate would have been about $90,” said TechInsight's Al Cowsky in an interview with Reuters. “They had a trade-off in cost.”
The next most expensive components are the A12 Bionic SoC and the Intel XMM 7560 Gigabit LTE modem, which combined account for $72 of the iPhone XS Max' total cost -- allegedly. We say allegedly, because TechInsights puts this disclaimer in with its analysis:
All cost estimates provided here are compiled using information available to us at the time of the initial teardown. Some assumptions have been made where concrete data is not yet available. We will continue to gather and refine this costing data throughout our ongoing deep-dive teardown process and analysis.
With that being said, if TechInsights' estimates are anywhere close to being accurate, the delta between $443 and $1,250 is immense. However, it doesn't consider R&D, marketing and numerous other factors that must be taken into account when doing cost analysis of a product.
In fact, Apple says that these outside estimates are always off the mark, with CEO Tim Cook stating in April 2015, "I've never seen one that's even close to accurate."