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Teardown Reveals Samsung’s Galaxy S5 Costs Only $256 to Manufacture

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A recent teardown of the Galaxy S5 has revealed that the bill of materials for the device is about $256, while Samsung is currently selling the device off contract for about $660. That’s not a bad little markup.

IHS teardown specialist, Andrew Rassweiler had a few interesting things to say about the Galaxy S5, mainly concerning Samsung’s rehash of devices we have already seen internally.

In other words, it may look a bit different on the outside, but the Galaxy S5 features no real breakthroughs or “earth-shattering features.” 

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 breakthroughs, there’s nothing earth-shattering. It’s really just a continuation of what has come before.

While the Galaxy S5 is certainly a step above its predecessor, the Galaxy S4, with its fingerprint scanner, gorgeous 5.1″ Super AMOLED display, and water resistibility, Samsung could have given us more.

As for prices, IHS states that the display was the most expensive part, coming in priced at $63. The fingerprint scanner addition cost a lowly $4, memory chips were about $33, and the biosensor is priced at $1.45.

Of course, Samsung puts a lot of investment in these devices with software, distribution, and marketing. If those numbers were factored in, then we might be seeing a much higher number per unit.

Via: re/code
  • morpheus282

    This doesn’t surprise me much at all and goes to show the markup on the devices is insane. I have yet to see a good reason that we can buy a 10″ wifi tablet for less than the price of a 5″ 4G phone without subsidies.

  • Daistaar

    I’d love to see this same type of article for the M8. I wonder how much it cost to laser-cut a single piece of aluminum as well as the cost of a SLCD3 vs. The SAMOLED.

  • Al-Burrit0

    Alright somewhat off topic and im looking for some help. I’m having problems with my MOTO X. My lock button is unresponsive when I press it or it just reboots my phone constantly. At times the button does start working again, but as of right now it is not working.since the phone is sealed is there an easy way to fix this or…?

  • mrjayviper

    they are selling these phones around $850 USD locally (not third world country)…

  • cand3rson

    I think there’s little reason why a high-end smartphone should cost much more than a Nexus 5 beyond unreasonable profit margins

  • jimbob

    Profit = EVIL!!!!!!! How dare those Japanese 1%ers at Samsung get rich off the poor unsuspecting American smartphone user.

    • BillyJoeRayBob

      They’re Korean, not Japanese. :p

  • crazed_z06

    Remember when the moto x cost $221 to build and cost 650 off contract.. it had way weaker hardware and cost 50 bucks more than the gs5..

    Yet somehow people thought that was just fine lulz

  • Mark Mann

    Over 200% markup? As well as they apparently sell, they could stand to lower msrp quite a bit and still make a nice profit, EVEN after advertising and development

  • Daniel

    Is there a similar teardown of the M8 yet?

  • Milton

    Typical cheapsung

    • http://www.ytmnd.com MH

      So, the Iphone 5s at $199 to build $50 higher retail price is a better deal.

      Cheaper materials (yes billet aluminum is cheap) and no gorilla glass for more money. Sounds like a deal.

      • Milton

        Not really, iphones are just cheap plastic with a carved apple behind, very lame quality

        • http://www.ytmnd.com MH

          The Iphone 4/4s were glass and metal. The 5/5s are machined billet aluminum. The 5c is plastic, but since IHS didnt post a build cost for it, I didnt quote it. Either way, samsung is spending more to build their phones than “super premium” Apple.

        • fillyo75

          I love these, what’s your phone of choice? Don’t tell me a Nexus 5

          • Milton

            Nope, no cheap plastic for me, that means, no nexus

        • pappy53

          What an idiotic, uninformed response. LOL!

  • LionStone

    “It’s really just a continuation of what has come before.”, yep we knew that.

  • Patrick Crumpler

    This is why I will continue to buy a nexus for as long as I can. I’m fine paying up to double the cost, that’s margin enough for me. Even a Moto x at $450

  • VIphoneFan

    I’m very satisfied with my note 3, won’t be doing any upgrades any time soon.

  • http://twitter.com/7Syon Eclectech

    Heck, after playing with the GS5 phone I concluded it was cheap, but even I couldn’t have guessed it was this cheap. $256? Wow…

  • Charles Burnette

    I don’t understand why they want to digg any further in making a product,? That’s how business always been throughout last century, you can’t stay in a business, if you don’t make a profit, simple as that. Think about that. Think all what you have to invest, before you start your business.

  • shmigga

    “Only costs $256″???? I am pretty sure this is the most expensive smart phone to build.

  • rww

    I hate these sorts of articles because it shows how completely ignorant most people are about what it takes to actually manufacture something. Just because it only has $256 in materials doesn’t mean anything. The tooling costs are millions of dollars on top of that and that cost is amortized into the piece price. Don’t forget about the many millions of dollars to make the assembly line itself, as well as all the jigs, inspection equipment, etc. And many more millions for engineering design and development.

    Nope. It’s just $256 for materials vs. the $600 MSRP. Those bastards are raking us over the coals and enjoying so much profit. Uh huh. Right.

    • Matt

      ++++1000. This exactly.

    • trixnkix637

      Yea but most of what you mentioned should be considered an operating cost. As in these are costs that would occur regardless of what product they are manufacturing. Now materials cost on the other hand, that is something entirely different & only attributable to the product being made. So technically in a roundabout way the article isn’t misleading anyone directly.

      • rww

        We’ll have to agree to disagree on that one. Operating costs need to be covered too.

        Just making a tool to mold a single piece of plastic usually costs hundreds of thousands of dollars. If you want to manufacture *millions* of units, that means you’ll need many copies of that tool and each one will have to be replaced several times over that production run. There is real cost here and the scale of it is much higher than people realize.

    • http://infotainmentempire.blogspot.com Rob

      Plus the economies of scale only happens because they’re manufacturing MILLIONS of these. If they were shipping a couple hundred thousand the price per component would more than likely increase. And this is what makes the One Plus One even more intriguing to me. Not a giant like Samsung yet they’re going to make an HD display, SD801, and good camera for under $400-450.

      • rww

        Agreed! I’m very curious how they can do it at that low of a price point. I keep waiting to hear what the big compromise is going to be..

      • needa

        i dont think the increase for lower production is all that much when using the same, and older, parts as everyone else.

        • http://infotainmentempire.blogspot.com Rob

          Then if that’s the case I would have to say phones are a little overpriced as far as MSRP goes. Instead of $700+ they should maybe be $550+. Fortunately some phones are around $500 at MSRP when purchased through a major carrier (G2 and original HTC One M7, before the M8 came out).

    • r0l

      Well it’s actually the carriers getting their $200-300 cut that’s killing us. There’s a reason the N5 is cheap, no carriers. The parts aren’t any cheaper and LG is likely not making much less (if at all) than the carrier branded models.

      There’s a reason Verizon is BOGO’ing the S5, it’s just them forgoing the hardware profit, it’s not actually losing them any money.

      • needa

        very true. kinda like how the moto x was sold to carriers for $350 and they marked it up to $549.

      • j

        This is correct. Retail pricing is ABSOLUTELY higher because most phones are subsidized. Just like anything that is subsidized, the price inevitably goes up because the subsidy makes it affordable to the consumer while raking in extra large profit for the manufacturer. Without the subsidy model, smartphones would sell in the $400 range, not $600.

        • michael arazan

          If they sold it out right and cut out the middle man carrier cut, it would be $450

      • rww

        Maybe I’m reading your statement backwards, but I think you’re mistaken. The carrier subsidy is being paid by the carriers to the phone manufacturers. They don’t get a ‘cut’ when you buy a phone – they pay for a portion of your phone in exchange for you signing the contract.

    • Intellectua1

      Exactly what I was thinking as soon as I read the headline

    • cizzlen

      I was waiting for all the nerds to complain but leave thoroughly pleased to have read this instead.

    • Kisuk3

      Are you compelety out of your mind??

      Enjoying so much profit eh? Yeah to the tune of around 7-12 billion dollars per quarter!
      They are also practically state owned and have been the subject of numerous high profile investigations into their business practices throughout the year.

      Those asembley plants already exist and have for years and most labor is outsourced to state controlled/owned plants in china, Vietnam and Singapore. R&D fine, but profits don’t lie. They have more cash than some African nations.

      If you want further proof just check out what companies like Oneplus one are doing.

  • Kane Desousa

    I liked the S5. For about a day or so. Pentile screen drive me crazy… The grain they exhibit and the colors are just not pleasing to my eyes at all..

  • pappy53

    So, if Samesung has this much markup it is okay, but if Apple does, it is highway robbery?

    • Justin W

      I think the fact that Apple has a 64GB model with around 400% markup over cost of goods is what gets people more than Samsung vs. Apple. I think it’s starting to make sense to people that businesses have other costs aside from the cost of goods used in the manufacturing process (it’s not like TouchWiz just grew on a tree, or they advertised for free). Both companies have the same to say, it’s just unfortunate (well, for the consumer, anyway) both choose to charge hundreds more for a module that costs a whopping $5 more.

  • Disqus_n00b

    According to Samsung’s financial statements, they spent 24% of revenues on selling and admin in 2013. Smartphones could be a higher or lower % than TV’s or refrigerators, but let’s assume 24% on the $660 retail price, which is $158 per phone.

    So $256 materials + $158 expense per device = $414 total cost, vs $660 price.

    Plus integration into Samsung apps and family which you cannot really measure. If you buy a GS5, would you get an iPad or G-Tab next?

    They are doing quite well here by masking the actual price in 2-yr contracts.

    • pappy53

      Why would you figure 24% of $660? They aren’t getting $660 revenue per phone.

      • Disqus_n00b

        True, maybe they sell in bulk to the carriers, but what they get is closer to $660 than $199* plus activation

        • jb

          Source?

    • The Narrator

      It’s called greedy some beaches

      • rals

        Running a business is greedy??? At the end of the day they are making a decent gross margin on the products that they sell, not as much as Apple, but enough $’s to back into the company…I’m mean marketing.

  • Good_Ole_Pinocchio

    Only? That’s pretty expensive. Not even the iPhone costs that much to make

    • Maxim∑

      iPhone 5S costs 218$ to make that’s really not far off, the difference probably is coming from the display

      • Good_Ole_Pinocchio

        It’s the most expensive high-end handset. It’s pretty far off….and cost much more than the S4 too.

  • Mark Aaron Collado

    is it worth it S5 owners? how do you like the S5 so far?

  • hexoDAT64

    Isn’t that more than they usually cost to build? Sure the phone is overpriced off of contract, but R&D and advertising aren’t free. Not much hope of ever seeing a phone like this for $299 or $349 off contract if it costs that much to make

    • Ryan N

      as production continues and components become cheaper the cost will come down as well.

  • Patmw123

    “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 breakthroughs, there’s nothing earth-shattering. It’s really just a continuation of what has come before.”

    I can’t say I’m surprised at all.