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Amazon Kindle Fire Costs US$201.70 to Manufacture

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Amazon's Kindle Fire media tablet carries a BOM cost of $185.60, according to preliminary findings from the IHS iSuppli Teardown Analysis Service. When manufacturing services expenses are added, the cost increases to $201.70, as shown in the below table.

This is slightly lower than the IHS virtual estimate of the Kindle's cost issued in September of a BOM amounting to $191.65, and a total of $209.63, when factoring in the manufacturing and the margin expenses.

Please note that this teardown assessment is preliminary in nature, and accounts only for hardware costs and does not include additional expenses such as software, licensing, royalties or other expenditures.

"The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point," said Andrew Rassweiler, senior director, teardown services for IHS. "Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle. This is a similar business model to wireless companies such as AT&T or Verizon. They sell you a phone that costs them $400 to $600 or more to make for a price of only $200. However, they expect to more than make up for that loss with a two-year service contract."

Surprise design wins in the Kindle fire include the use of a touch screen control-integrated source from the previously unknown source Ilitek and a wireless local area network (WLAN) module from new supplier Jorjin.

The use of an unfamiliar source for the touch screen controller integrated circuit (IC) reflects the growing trend of new suppliers entering the market. Amid booming sales for touch screen devices, IC suppliers have jumped into the fray to satisfy the increase in demand. This trend toward employing lesser-known sources is evident in recent designs including the Vizio tablet, which featured a touch control IC from EETI -- and the Lenovo A60 smartphone, which employed a touch control IC from FocalTech Systems.

The use of the Jorjin WLAN module also represents a surprise, given that most tablet designs employ more complex combo solutions from Broadcom or Texas Instruments. The Jorjin device provides a cheaper approach to implementing WLAN support, at just $4.50, yielding a $1 savings in BOM costs.

Texas Instruments (TI) dominates the Kindle Fire design. Most notably, TI contributes the applications processor, which provides the core functionality of the tablet. The TI OMAP4430 processor costs $14.65, accounting for 7.9 percent of the Kindle Fire's total BOM. However, TI also supplies other devices, including the power management device and the audio codec. This gives TI a total of $24 per each Kindle, or 12.9 percent of the BOM.

TI's OMAP4430 applications processor has been identified in an increasing number of designs dissected by the IHS, including Research In Motion's PlayBook RDJ21WW tablet, as well as the Motorola Droid Bionic XT875 and LG Optimus 3D P920 smartphones. The OMAP4430 is a dual-core ARM Cortex-A9, 1GHz processor with a IVA 3 Hardware Accelerator and a SGX540 3D graphics core. The device supports 1080P 2-D and 720P 3-D graphics, and is produced using 45nm process geometry.

The single most expensive subsystem in the Kindle Fire is the display and touch screen, at a combined cost of $87.00, or 46.9 percent of the BOM. Amazon sources the display from two companies: LG Display and E Ink Holdings. The display uses E Ink's FFS technology, which LG Display has licensed.

Improved production yields and efficiencies have assisted greatly in reducing the cost of FFS tablet displays. In the same vein, touch screens have made big strides in cost reduction during the course of 2011.

The Kindle Fire incorporates 8 gigabytes of eMMC NAND flash memory. In the individual Kindle Fire torn down by IHS iSuppli, the NAND flash was supplied by Samsung. The eMMC NAND flash is fairly popular with most manufacturers, as it includes memory management circuitry.

IHS had assumed originally that the Kindle Fire might have as much as 8 gigabits of low-power DDR2 DRAM memory. In fact, the Kindle Fire ships with only 4 gigabits. This shaved off a few dollars from our previous cost estimates. Elpida was the supplier of the DRAM in the individual Kindle Fire torn down by IHS iSuppli.

Together, the NAND and DRAM form a memory subsystem costing $22.10, or 11.9 percent of the total BOM.

Preliminary Bill of Materials and Manufacturing Cost Estimate for the Amazon Kindle Fire

Components Cost Notes
Display & Touchscreen $87.00 LG Display (LD070WS2-SL05 - 7" - 16.7M Color, 1024x600 Resolution, 169ppi, w/ IPS (FFS) Technology). LG Display is dual-sourced with E Ink (fabbed by Chungwa Picture Tubes, or CPT).

Touchscreen - assumed to be from a newer supplier (relatively unknown), as we have been finding increasing usage of unknown IC controller suppliers.
Main PCB $64.45
Memory $22.10 NAND Flash - 8GBytes eMMC as expected - DRAM - LPDDR2 - 4Gbits - Less than expected (8Gbits assumed originally as this is very common now in smartphones). Samsung seen on NAND, Elpida on DRAM (and Hynix from third-party teardowns). Memory is always multisourced.
Apps Proc $14.65 OMAP 4430 - As expected - OMAP 4430 also seen before in Motorola Bionic / LG Optimus / RIM PlayBook
WLAN $4.50 Jorjin WG7310-2A 802.11 b/g/n (no BT) Module - Based on TI WL1270 - originally had assumed with BT/FM (using very common combo chips like WL1285 or BCM4329). This drops the cost from our original estimate. The last WL1270 we saw was in the Barnes & Noble Color Nook.
Other & Peripheral PCBs $23.20 Includes all supporting components not specifically listed above.
Battery $16.50 3.7 / 4400mAh -- This is lower than both the RIM Playbook and the iPad 2 - and is a function of the small screen and lack of 3G/4G wireless connectivity.
Enclosure $14.40 Plastics, speakers, internal frames, fasteners, etc.The $79 Kindle has a pricey magnesium central housing. Nothing like that here - just plastics and stampings. Still mechanical components are often costly to produce and have low yields.
Box Contents $3.25 This is lower than expected because Amazon has really cut back on packaging. The shipping box is the 'commercial' box, and the only accessory is a basic wall charger (5V/1.8A).
Subtotal $185.60
Device Costs
Manufacturing Costs $7.10 Dropped this figure a bit to account for cheaper-than-initially-expected build vs. other 7" tablets.
EMS Margin $9.00
Hardware Cost to AMZ $201.70 Preliminary total in advance of finished teardown (11/17/11)

Other costs to be added - R&D, software overlay, SG&A for AMAZON, logistics, extra packaging for retail shipping, and marketing 'subsidy/incentive' dollars to third-party resellers such as Best Buy.

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