Low-end iPad mini carries $188 BoM

USA: The base model of Apple’s new iPad mini with Wi-Fi only and 16 gigabytes of NAND flash memory, carries a bill of materials (BOM) of $188, according to a preliminary estimate from the IHS iSuppli Teardown Analysis Service. When the $10 manufacturing expense is added in, the total cost to manufacture the iPad mini rises to $198.

Based on the ratio of cost to retail price, IHS has concluded that the iPad mini is slightly more profitable on a percentage basis than the comparably equipped version of the New iPad when it was released in March 2012.

“With the iPad mini, Apple is sticking to the premium-brand strategy it has always used for its media tablet and smartphone products,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “Apple’s strategy entails offering differentiated hardware that justifies higher price tags than comparable products. This differs markedly from Amazon’s 7-inch Kindle Fire HD and Google’s Nexus 7 tablets, both of which are essentially low-margin or no-margin giveaways at a $199 retail price. Apple makes healthy margins on its hardware, while Amazon and Google employ different strategies with their 7-inch tablets.”

Amazon’s Kindle Fire HD and Google’s Nexus 7 have set new consumer pricing expectations for 7.x-inch media tablets, starting at the $199 point. These low-priced tablets pose a competitive challenge to Apple’s media tablet dominance.

“Amazon and Google want to put tablets in consumers’ hands—even if it means doing so at a minimal hardware profit— with the intent of making their money on the content users buy, and/or the advertising and paid content they will be exposed to by buying the devices,” Rassweiler observed.

With the iPad mini, Apple continues to garner even greater profits from sales of the higher-end tablet models that have greater amounts of flash memory. Because Apple provides consumers no option to expand the iPad mini’s storage capacity with any sort of removable memory card, the only way users can upgrade the amount of flash available on the product is to buy the higher-end 32GByte and 64GByte models.

These higher-end models—with or without 4G wireless capabilities—are priced at $100 intervals, at $429 and $529. However, the incremental cost of the additional NAND flash memory to Apple is only $9.60 for the additional 16GBytes of memory and $19.20 for an additional 32GBytes of memory. This means that compared to the 16GByte model, the 32GByte version of the iPad mini generates about $90 in additional profit for Apple for every unit sold. For the 64GByte model, Apple’s profit is about $171 higher than the 16GByte version.

The individual iPad mini dissected by IHS included only a Wi-Fi connection, with no 4G Long Term Evolution (LTE) wireless hardware included. Based on the preliminary teardown analysis, the addition of the 4G LTE module hardware would cost approximately $34.00. This cost excludes essential intellectual property (IP) licensing fees, such as those for CDMA/WCDMA/LTE wireless technology.

The defining feature of the iPad mini is its 7.9-inch display, larger than comparable 7.x-inch tablets, whose displays are nearly 1-inch smaller, at just 7.0-inches. The iPad mini employs GF2 multi-touch touchscreen technology, which allows the touchscreen module to be thinner than competing tablets. However, the new GF2 technology also makes manufacturing more challenging during initial production by reducing manufacturing yields.

This drives up pricing for the touchscreen module. The initial cost of the display and touchscreen module is preliminarily estimated at $80.00, representing a hefty 43 percent of the total BOM for the low-end iPad mini.

The main display suppliers for the iPad Mini are likely to be LG Display of South Korea and AU Optronics (AUO) of Taiwan. LG Display has been supplying panels for the entire iPad line since the launch of the first iPad, and is likely to be the main supplier for the iPad mini displays. The IHS iSuppli Teardown analysis service identified Samsung as the supplier of the display in the individual New iPad that was dissected in March. It is important to note that Apple has multiple sources for many key components, such as the display.

With the high price of the display module, Apple needed to reduce expenses in other sections of the iPad mini. The most notable example of cost cutting is in the processor: an A5 chip manufactured with a 32-nanometer process technology. The A5 used in the mini is a part that has been used in two other Apple products, including the latest Apple TV model—with that version using only one of the cores in the A5 32nm—as well as the latest version of iPad 2. Because of this, the A5 processor costs just  $13.00, accounting for only 4 percent of the total BOM. This compares to $16.50 for the Texas Instruments Inc. OMAP processor used in Amazon’s Kindle Fire HD.

“The use of the A5 is a great example of Apple leveraging a common component in as many devices as possible in order to increase purchasing volumes and keep costs to a minimum,” Rassweiler said.

Despite the well-publicized legal battles between Samsung and Apple, Samsung remains the manufacturer of the processor, the same as in the iPad 2 and New iPad. The A5 is based on Apple’s own design, and Samsung simply serves as the part’s foundry manufacturer, rather than as its supplier.

Other notable suppliers in the iPad mini include:

* SK Hynix and Elpida, which respectively supply the NAND flash and DRAM, which are collectively estimated to cost $15.50.
* Dynapack, the maker of the $13.50 battery.
* STMicroelectronics, which sells the gyroscope used in the user interface and sensor combo module.

Amazon loses less money with Kindle Fire HD

USA: The low-end Kindle Fire HD—with a 7-inch display, 16 gigabytes of NAND flash and Wi-Fi wireless only—carries a bill of materials (BOM) cost of $165. When the $9 manufacturing cost is added in, the cost to produce this model of the Kindle Fire HD increases to $174.

At $174, the Kindle Fire HD costs slightly less to make than its sales price of $199, strictly from a hardware and manufacturing perspective and not including other costs. This is an improvement from original Kindle Fire, which was priced the same at $199, but was initially estimated to carry $201.70 in BOM and manufacturing costs based on estimates made in November, 2011, meaning that Amazon took a loss on every media tablet sale.

“Amazon’s strategy with the Kindle Fire HD 7-inch tablet is not really to make money on the hardware itself,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “Rather, the idea is to create a product at a compelling price point and then get a lot of consumer traction in order to put Amazon content and the Amazon online store into consumers’ hands. However, for its second-generation Kindle Fire, Amazon has reduced the cost to make the tablet, cutting the cost of the hardware subsidy that the company must put out to pursue its strategy.”

Amazon managed to reduce the BOM cost of the HD, despite improving the specifications compared to the original Kindle Fire. However, most of the improvements are incremental, allowing Amazon to reduce costs or minimize increases in individual subsystems.

The biggest area of cost reduction was in the display, accounting for a $23 decrease in the BOM compared to the first Kindle Fire. Like the original Kindle Fire, the HD sports a 7-inch display. However, the new model increases the resolution to 1,280 x 800 pixels, up from 1,024 x 600.

The display and touchscreen subsystem costs a total of only $64 accounting for 39 percent of the Kindle Fire HD’s total BOM. In contrast, the original Kindle Fire’s display and touchscreen carried a cost $87 and accounted for 47 percent of the product's BOM, based on pricing from November 2011.

The memory configurations in the Fire HD also doubled compared to the original Kindle Fire. The amount of NAND flash memory in the base-model HD has increased to 16GBytes, up from 8GBytes in the previous version. DRAM content rose to 1GByte of LPDDR2+ memory, up from 512 megabytes.

The total memory cost in the Kindle Fire HD amounts to $23, or 14 percent of the BOM. Thus, despite a doubling in memory content, the combined memory cost for the HD is only $1 higher than in the original version of the Fire. This is because of normal pricing reductions that occur in the semiconductor market.

There’s also an upgrade of the core Texas Instruments processor from the OMAP4430 to the OMAP4460, which raises the frequency to 1.5GHz, up from 1GHz. This incurred an increase of less than $2 in BOM cost compared to the first Kindle Fire.

The battery was unchanged from the original model. However, because of normal electronics industry learning-curve dynamics, the cost of the battery declined to $15, down from $16.50.

The HD also added a camera module, which was absent from the original model. However, with a low resolution of just 1 megapixel, the camera costs a negligible $2.50. This compares to $11 for the 5-megapixel camera, plus a secondary 1-megapixel 720p front-facing camera, in the iPad mini.

“Overall these are all progressive incremental changes, with nothing revolutionary added,” Rassweiler said. “However, these features allow Amazon to offer a better feature set for less cost than the last version of the Kindle Fire, while maintaining the ‘magical’ $199 entry point at retail.”

Amazon is offering other versions of the Kindle Fire HD beyond the base model dissected by the IHS iSuppli Teardown Analysis Service. The company also is selling two versions with 8.9-inch displays—one with Wi-Fi, and another with a 4G Long Term Evolution (LTE) wireless connection. Both the 7-inch and 8.9-inch models offer 16GByte and 32GByte memory options.

“Amazon has taken an interesting twist on the ‘memory upgrade for dollars’ approach that Apple pioneered with the iPad line,” Rassweiler said. “There is a $70 price difference between the 16GByte and 32GByte 8.9-inch models. However, there’s only a $50 gap for the same difference on the 7-inch model. That means Amazon makes a better incremental profit margin for the 8.9-inch 32GByte model.

“The Kindle Fire HD 8.9-inch with LTE comes in 32GByte and 64GByte options. There is a $100 retail price difference between the models. These price variations are interesting because the cost of NAND flash is approaching $0.50 per GByte in the market for commodity NAND flash, making these optional upgrades highly profitable for Amazon.”

Major design winners in the Kindle Fire HD include LG Display, which supplied the display/touchscreen subsystem in the individual tablet torn down by IHS. However, IHS believes that Panasonic is also a source for the subsystem. Despite the cost reduction, the display remains the most expensive section of the Kindle Fire HD.

Samsung contributed the NAND flash, while SK Hynix was the source of the DRAM. As mentioned previously, Texas Instruments supplied the processor, and the company also provided the HDMI component IC.

Microsoft Surface RT more profitable than iPad

USA: The Surface RT model with the minimum 32 gigabytes of NAND flash memory and an optional black Touch Cover carries a bill of materials (BOM) of $271, as per a preliminary estimate from the IHS iSuppli Teardown Analysis Service. When the $13.00 manufacturing expense is added in, the total cost to manufacture the Surface rises to $284.

Please note that these teardown assessments are preliminary in nature, account only for hardware and manufacturing costs and do not include additional expenses such as software, licensing, royalties or other expenditures. In terms of its size, feature set and pricing threshold, the Surface RT is clearly designed to compete with the full-sized iPad.

“The Surface represents a key element in Microsoft’s strategy to transform itself from a software maker into a devices and services provider,” said Andrew Rassweiler, senior principal analyst, teardown services, for IHS. “Key to this strategy is offering hardware products that generate high profits on their own, similar to what Apple has achieved with its iPad line. From a hardware perspective Microsoft has succeeded with the Surface, offering an impressive tablet that is more profitable, on a percentage basis, than even the lucrative iPad based on current retail pricing.”

At an estimated total BOM and manufacturing cost of $284 and a retail price of $599, the Surface RT generates hardware and manufacturing profits that are, in percentage terms, higher than the low-end iPad. Even at a price of $499 without the Touch Cover, Microsoft will generate a profit margin that is greater than the low-end iPad, in percentage terms and on a per-unit basis.

One key differentiating hardware feature of the Surface hardware is the optional Touch Cover, which is essentially a cover that also acts like a full-function keyboard, but uses only capacitive touch sensing to operate. The keyboard works very well and even has a touchpad at the bottom, making the device feel and operate very much like a notebook PC when the Surface sits on its kickstand and the Touch Cover is laid flat.

“The Touch Cover represents a best-of-both-worlds approach for the Surface, giving it the most attractive features of both notebook PCs and media tablets,” Rassweiler said. “This feature differentiates the Surface from the iPad. The end result for Microsoft is a very compelling product that is impressive. It’s also clearly more Microsoft friendly—so enterprises and major users of Microsoft Office likely will gravitate to this very competent product as a possible substitute to conventional notebook PCs when used for travel.”

The Touch Cover serves as an example of a feature that can encourage users to upgrade to a higher-end model that generates more profits for a company—similar to premium-priced tablets that feature larger quantities of memory. With options like the Touch Cover or extra flash, a manufacturer can offer a low-end model at a base price that meets a psychological threshold—$499 in this case—with the hope that consumers will impulsively opt for extra features or memory upgrades that generate major profits.

IHS estimates preliminarily that the Touch Cover costs Microsoft $16 to $18 per unit. The Touch Cover accessory integrates a printed circuit board (PCB) assembly with numerous chips, including a Freescale microcontroller and an Atmel touchscreen controller.

Samsung Electronics Co. Ltd. is the biggest design winner in the Surface, based on our teardown sample. Various divisions of Samsung supply components or complete subsystems for many of the most expensive portions of the individual tablet dissected by the IHS iSuppli Teardown Analysis Service: the display, the NAND flash and the battery pack. However, most of these parts are available from multiple sources, and other suppliers are likely utilized in other individual Surface tablets.

Another major winner is Nvidia Corp., which supplies the Surface’s processor. The Surface RT is based on an Nvidia quad-core Tegra 3 processor, which uses the ARM architecture. The Tegra 3 costs an estimated $21.50, accounting for 8 percent of the Surface RT’s BOM.

Also scoring some major wins in the Surface RT is Atmel, which supplies multiple touch controllers in the Surface itself as well as in the Touch Cover.

Reshuffle of LCD monitor sizes in 2013 with new size debuts

TAIWAN: According to WitsView, the display research division of TrendForce, the development in LCD monitor market in 2013 would tend to be conservative. From the view of the demand side:

* Global economy still shows full of uncertainties and consumers face constraints in spending;
* The LCD monitor, as a peripheral product to PC, is estimated to be squeezed by the hot selling tablets and smart phones even the market highly anticipates Win8’s success;
* As products move toward thin style, the markets of Desktop and monitor are threatened with Utrabook and Utra-like NBs seeing price drops.

From the view of the supply side, panel makers strategically shift capacities to high profitability products such as LCD TVs and tablets, resulting in a continuously decreasing LCD monitor panel production. Due to the factors mentioned above, the global LCD monitors (AIO included) show a constant decline in shipments in 2013. WitsView forecasts that, the global LCD monitor shipment, including AIO, would reach around 165 million units in 2013, declining by 2.8 percent YoY.

Among which, the monitors would amount to 151 million units, declining by 3.7 percent YoY, while the AIO would see a shipment of 14 million units and a YoY growth of 8.1 percent.
     
There would be changes in the LCD monitor market in 2013 given the new sizes will be unveiled. Among the new sizes, the 19.5”W products attract brand makers’ most attention mainly because 19.5”W comes between 18.5”W and 20”W. Based on WitsView’s estimates, in 2012 the three sizes 18.5”W, 19”W, and 20”W account for 44 percent of the overall monitor shipment, and the replacement effect cannot be overlooked.

For panel makers, 19.5”W in Gen 6 fab can reach the same cutting advantage of 24 cuts as 18.5”W, possessing an extremely high glass cutting efficiency. In 2012, only CMI has started to mass-produce 19.5”W, but LGD and AUO would join the arena in 2013, possibly lifting 19.5”W’s market share to above 7 percent.

Excelitas acquires Kaiser Systems

WALTHAM, USA: Excelitas Technologies, a global technology leader focused on delivering innovative, customized opto-electronics to OEMs seeking high-performance technology solutions, announced the acquisition of privately-held Kaiser Systems, Inc., a leading designer and manufacturer of custom, high voltage (HV) power systems for medical, industrial, and safety and security applications. The company is based in Beverly, MA and was founded in 1980.

The acquisition of Kaiser Systems adds a variety of high voltage power systems to Excelitas’ existing high-reliability power systems portfolio, which includes AC-DC rectifiers, DC-DC converters, UPSs and EMI filters for a range of OEM applications. Kaiser’s HV power systems include Capacitor-Charging and Flashlamp Power Supplies, Electron Beam and Ion Beam Power Supplies, HV DC and Pulsed Power Supplies, X-ray Generators, and integrated X-ray sources (under the brand name Omniblock).

“The addition of Kaiser Systems expands Excelitas’ presence in medical, industrial, and safety and security markets and broadens our portfolio of high-performance, high-reliability power products,” said David Nislick, CEO, Excelitas Technologies.

“We are pleased to welcome the Kaiser team to Excelitas and the Advanced Electronic Systems business,” said Doug Benner, senior VP and GM, Advanced Electronic Systems, Excelitas. “Kaiser Systems has deep technical expertise in high voltage engineering, which complements and augments Excelitas’ existing custom power solutions capabilities and we look forward to their contributions to accelerating our power systems growth.”

“We are excited by the opportunity to become part of Excelitas, combining Kaiser’s proven leadership in high voltage power solutions with Excelitas’ strength in providing innovative, customized opto-electronic solutions to OEMs around the globe. There is a clear synergy between Excelitas and Kaiser in serving high-performance application areas including industrial lasers, medical lasers and IPL-based aesthetic systems, analytical instrumentation, material processing, and a variety of commercial security applications,” said Ken Kaiser, president and founder, Kaiser Systems.

CSR sets new price/performance benchmark with SiRFatlasVI automotive infotainment platform

CAMBRIDGE, ENGLAND & SUNNYVALE, USA: CSR plc introduced the SiRFatlasVI infotainment SoC, the latest generation of the company’s value-leading navigation, multimedia and connectivity solution for creating high-performance, mainstream in-vehicle infotainment systems and mobile Internet and portable navigation devices. The SiRFatlasVI SoC enables manufacturers to rapidly develop and bring to market exciting new OEM and aftermarket products that are able to run multiple functions at the same time for an exceptional user experience.

“Thanks to the significant performance improvements we’ve made in the SiRFatlasVI platform, it’s now possible for a driver to utilise 3D navigation or make a hands-free phone call while passengers watch a movie, listen to music and surf the web from their laptops via Wi-Fi, and we believe we are the first to deliver this capability to this price category,” said Anthony Murray, Business Group SVP, CSR.

“With SiRFatlasVI, CSR has once again established a new price/performance benchmark for mainstream infotainment solutions, and with our local R&D and support centers, we are best-positioned to help customers get to market quickly to take full advantage of their market window with relevant and differentiated product offerings.”

The SiRFatlasVI SoC offers 3x CPU, 3x graphics and 6x multimedia performance improvements over the previous SiRFatlasV chip at virtually the same BOM cost. These performance improvements will enable the driver to experience more fluid user interfaces, richer map graphics, and concurrent navigation and media playback.

The SiRFatlasVI SoC integrates a high-sensitivity multi-satellite GNSS engine that supports the four major global navigation systems: GPS and GLONASS today; Galileo and Compass (with a simple software upgrade) when these systems are operational. The multi-satellite GNSS support offers flexibility and improved satellite acquisition and location tracking in challenging situations like urban canyons.

The integrated ARM Cortex-A9 application processor produces up to 2500 DMIPS, which enables advanced applications and multiple OS’s. It is supported by an ARM NEON multimedia accelerator, which is designed to boost multimedia performance by 30 to 40 percent and enables up to 720p decode. Customers can choose to utilise either the new POWERVR 3D graphics accelerator core or rely on the 2D core as a low-cost option.

The integrated memory controller supports 16-bit DDR3/DDR3L and DDR2 memory technology. The SiRFatlasVI SoC supports 60-bit ECC NAND as well as direct boot from SDXC, SLC NAND flash and managed NAND. DDR3 and NAND offer lower total BOM cost, as well as other integrated peripherals.

Extensive integrated I/O and analog functionality, including two USB ports, UART/I2S/SPI/I2C, camera and touch screen interfaces and an audio codec, round out the SiRFatlasVI solution.