An (Updated) Inside Look at the iPhone

In a 2018 econlife post, we started with this statement:

“For those of us who believe world trade–even with all of its problems– is beneficial, the inside of the iPhone is the perfect example.”

Today, it is still true.

Slicing  the Apple iPhone

Cost

A teardown of the 256GB iPhone 16 Pro Max takes us to the $485.00 they spend to manufacture it. So yes, although the phone retails for close to $1199.00, as we would expect, it costs Apple much less to make.

Below, AppleInsider compares the BOM (Bill of Materials) for the iPhone 16 and iPhone 15:

Components

Looking at the iPhone 16, we should remember that Apple mostly does the designing and the selling.

But, in between the beginning and the end, we can insert some of the 696 suppliers that Bloomberg names on its terminal. They top their list with Hon Hai Precision. As Apple’s largest assembler, Hon Hai is also known as Foxconn. In addition, the long list of firms includes Samsung, LG, Taiwan Semiconductor, Qualcomm, Broadcom, Alibaba, Sharp, Cirrus Logic, Sony, AGC, Corning, and Texas Instruments. The components they make include the 6.9 inch display for the screen, the 5G modem, the camera, the frame, the battery.

While referring to the iPhone 15, the following graphic hints at the 50 countries where the iPhone 16’s parts could have “hopscotched” until they finally wound up at a a Chinese Foxconn plant that did the FATP “final assembly, testing, and packaging,” and then came to a store near us. Almost a decade ago, we estimated that the combined journey for all of the parts could have been 500,000 miles:

As you can see in this video, the screen, developed in South Korea, could have traveled to Vietnam. Meanwhile, the phone’s proximity sensor was from Germany’s Trumpf and Sony did the rear camera sensors. The battery came from MFG in China but it needed lithium and cobalt from the DRC and Chile. Indeed, each supplier had its own supply chain covering multiple places:

Our Bottom Line: The Price System

Long ago we said that the iPhone was like a pencil. Described in a classic essay called “I, Pencil” by Leonard Read, we saw that the two are similar because their assembly depends on the cooperation of people in different countries who rarely know each other. The only reason they join in a complex supply chain is the price. The money each producer receives is the incentive to participate.

And that is the wonder of a global market when it functions successfully. Summarized by Wired for the iPhone 16, it is a collossal feat involving creativity, collaboration, and complexity.

My sources and more: AppleInsider had the perfect look at the newest iPhones and Wired, the video that inspired today’s post.

Our featured image was from AppleInsider.