Consumer Electronics

Apple TV Parts May Cost Less Than $64


The components in the latest version of Apple's (AAPL) Apple TV device, selling for $99, may cost less than $64, according to market research firm iSuppli.

The most expensive part, at $16.55, is the A4 processor, designed by Apple and manufactured by Samsung Electronics Co. (005930:KS), Businessweek.com reported today, citing El Segundo (Calif.)-based iSuppli. The same chip is used in the iPad and iPhone 4.

The new Apple TV plays TV shows and movies that are streamed from the Web. The previous model contained a hard drive that stored shows and movies for playback later on a home TV. The change in function led to a change in design. Apple TV is now 80 percent smaller than the original, reflecting alterations in its components, says Andrew Rassweiler, an iSuppli analyst who conducted a so-called teardown analysis of the device.

The materials cost of the new model leaves room for Cupertino (Calif.)-based Apple to earn a profit, Rassweiler says. With the original device, the cost of materials was closer to the retail price, he says. Tom Neumayr, an Apple spokesman, declined to comment.

"As soon as we saw the first A4 chip in the iPad, it was pretty clear to us that Apple's plan was to use it across several devices," Rassweiler says. "It makes sense to control costs across the supply chain."

components suppliers keep quiet

The next most expensive component is the 8-gigabyte flash memory chip, at $14, from Tokyo-based Toshiba Semiconductor, a unit of Toshiba (6502:JP).

Neither Chris Goodhart, a spokeswoman for Suwon (South Korea)-based Samsung, nor Rebecca Bueno, a Toshiba spokeswoman, returned calls seeking comment.

Apple used a chip from Broadcom (BRCM), an Irvine (Calif.)-based maker of wireless and communications chips, in a combined Wi-Fi and Bluetooth module that cost $7.65, iSuppli says. Texas Instruments (TXN), based in Dallas, contributed a 93¢ microcontroller chip, iSuppli says.

Bill Blanning, a Broadcom spokesman, didn't return a call seeking comment. Texas Instruments spokeswoman Kim Morgan declined to comment.

When Apple Chief Executive Officer Steve Jobs unveiled the newest Apple TV on Sept. 1, he called it "one more hobby," a variation on the "one more thing" catchphrase that he's used to punctuate product-introduction speeches.

Apple fell $3.88, to $278.64, yesterday on the Nasdaq. Company shares had risen 32 percent this year, before today.

Arik_hesseldahl
Hesseldahl is a reporter for BusinessWeek.com
With Carlos Bergfeld in Silicon Valley

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