The Galaxy S5 is now available for purchase throughout the world for around $600. While this is a competitive figure when compared to other rivals in the market, the actual cost of producing the device is much less than what people normally would expect. According to IHS, the research firm which specializes in such tear downs, it costs only $256 to build a Galaxy S5 from scratch, taking into consideration the cost of its internal components.
This means that Samsung is making around 60 percent profit per device sold, or around $340 per piece of hardware. However, this analysis reveals just the cost of the internal components, and the actual price of the device is influenced by a number of external factors like marketing, R&D etc. So, the actual profit earned by the firm may be much lesser than what these figures indicate.
The tear down revealed that the most expensive component of the device was its 5.1 inch Full HD Super AMOLED display. This large display costs around $63, which is $12 cheaper than the 5 inch display used on the Galaxy S4. According to the analysts, Samsung has managed to reduce the price of their display panels by streamlining its production.
The report states that the RAM and the Flash memory costs only about $33 in total, while the fingerprint scanner costs around $4. In comparison, it is said that the latest iPhone’s Biometric chip costs $15, which is almost 4 times what Samsung pays for the fingerprint scanner. The integrated biosensor should cost around $1.5, and the assembly cost is estimated to be around $5 per unit.
Even though some of the components like the fingerprint sensor costs less than its rivals, the total cost of the components are much higher than competing devices. Recent reports state that the iPhone 5S costs around $200 to build. Also, analysts are seeing a rising trend in the cost of Samsung’s devices, which is a little worrisome.
Last year’s Galaxy S4 cost $244 to build, so Samsung had to shell out around $12 more to build the new S5. In comparison, Apple has somehow managed to bring down the cost of manufacturing its iPhone 5S, and reports state that the $200 figure is less than what was needed to make the previous generation iPhone 5.
Naturally, an increase in the cost of production of a device will translate into higher selling prices. As a result, if Samsung continues this upward trend, future Galaxy devices may cost much more than its current prices.
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