iSuppli's analysis shows that the components and vendors for iPad 2 are little changed from the original tablet. "The iPad 1 and iPad 2 use the same components and suppliers for the NAND flash, the multi-touch controllers and touch screen drivers, as well as the same core chip in the wireless section as was found in the iPhone 4," says Andrew Rassweiler, senior director and principal analyst and teardown services manager for IHS, in a statement. "Many of the other components -- including the apps processor and the Bluetooth/frequency/global positioning system/wireless local-area network chips -- have the same suppliers and are essentially new revisions of the chips found in the previous iPad and other iPhones."
Holding the iPad 2 cost flat is all the more remarkable considering that the new tablet's screen is quite a bit more expensive than the original's, by about one-third, according to iSuppli. The firm estimates the iPad 2 display/touch screen subsystem carries a price tag of $127, compared to the its estimate of $95 for the first iPad.
There are a number of reasons for the jump in costs, most traceable to the manufacturing challenges faced by suppliers. iSuppli: "Production yields, though they have been improving, have been very low throughout 2010, and drove prices to be much higher than initially expected. Furthermore, refinements in the touch screen specifications have driven the price point even higher for the iPad 2. Contributing factors to that cost increases include more expensive glue to improve the efficiency/performance in the bonding, thinner Gorilla cover glass and a more detailed inspection process requiring additional equipment for optical and panel examination."
The new tablet's battery is more expensive, at $25 versus $21 in iPad 1. For the new tablet, the battery is much thinner and uses three cells instead of two. The associated power management circuitry for these batteries is a key reason why Apple can maximize battery life while holding down battery size and weight, according to iSuppli.
The other notably more expensive component is the A5 processor, the first dual-core version of Apple's custom-designed, and Samsung-built, CPU. According to iSuppli, the A5's estimated price of $14 is 75% higher than that of the A4 used in the original iPad. The firm notes that this cost will drop over time as chip production volume increases.