Saturday, September 29, 2012

Apple charges $649 to $848 (unsubsized) for each iPhone 5, but it costs only ($207 to $23*) - of which the Chinese assembler earns $8!

What connects the riot in a Chinese factory - 
and Apple's highly successful iPhone 5? 

It is reliably rumoured that the Foxconn factory assembles the iPhone 5. And that it earns US$8 (yes eight dollars) per set (that's the profit for assembly, excludes parts and shipping etc). 

But the iPhone retails for several hundreds of dollars and Apple is believed to make 40 to 50% per phone.  See -  - "Recent tear down analysis of the new iPhone 5 estimate that the cost to build the iPhone 5 at $207 to  $238, depending on the size of memory.  With retail prices (unsubsidized) of $649 to $848, Apple makes $442 to $611 per phone, or 70% on average. "

So why can't Apple pay Foxconn - say - an extra $2 per set? This would only be at the noise level for Apple.  In return, Apple should demand that its factory workers are paid $1 more per set. which will probably translate to some 15% rise as the Foxconn's labour cost per phone is $6.50 (see That still leaves Foxconn with a 12.5% uplift in its iPhone margin?

To a person on the high street the above may make sense. But I'm sure Apple and Foxconn  will have a different view on this idea.

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