Samsung recently released its newest flagship smartphone the Galaxy S5 in 125 markets globally to strong sales. Initial reports say that their first day sale alone has surpassed that of its predecessor the Galaxy S4. Consumers willing to get a SIM-free version of the device should expect to pay around $660 for it. Those willing to get it on a two year contract on a network will pay around $199.
The question that most of us probably are wondering is how much does it really cost to build the Galaxy S5? A recent teardown from IHS reveals the price of each material used to create the device totals to around $256. That’s a 60 percent gross margin for Samsung for every unit sold.
The most expensive material of the Galaxy S5 is its 5.1-inch full HD Super AMOLED display which costs $63. This is however cheaper than the 5-inch display of the Galaxy S4 which costs $75. The lower price means that the company may have found a solution to streamline the development of the new display which resulted in a lower production cost. Another component that has a high cost is the DRAM and flash memory module which both combine to $33.
What’s probably interesting to note is that the fingerprint sensor used by this device costs only $4. That’s $11 cheaper than the fingerprint sensor used by the iPhone 5S. If you’re interested to know, the iPhone 5S costs $199 to build.
Andrew Rassweiler, analyst at IHS, says that “Our main takeaway is that Samsung has been moved up to the higher end of the cost spectrum. It used to be that its typical flagship phone sold for $600 without a contract and had a bill of materials of about $200. Now they’re inching up above $250 regularly.”
Although the Samsung Galaxy S5 is the flagship model of the company right now there’s nothing extraordinary about it from the inside. Rassweiler said that “Inside we see mostly a lot of recycled components that we’ve seen before. There’s really nothing special inside where Samsung is pushing the envelope. There’s no breakthrough, there’s nothing earth-shattering. It’s really just a continuation of what has come before.”
The $256 cost set by HIS includes the price of materials as well as $5 cost of assembly per unit. This does not include the cost of the software used, distribution, and marketing of the device.