So far, the launch hasn’t gone quite so well. First there was a lackluster review. Then, days after going on sale on Easter Sunday, the company has admitted to a software glitch and is offering people who bought one a $100 credit in addition to a software patch. The credit makes the phone free to buyers willing to take a two-year service contract.

Now the market research firm IHS iSuppli has taken a Lumia 900 apart and, in a report shared with AllThingsD that will be released later today, has determined that it costs Nokia about $209 to build. And, judging from the parts being used, it’s not exactly built like the most cutting-edge phone on the market.

In fact, it seems like Microsoft and wireless chipmaker Qualcomm are both making an effort to showcase how efficient Windows Phone 7 for mobile can be; at the same time, they seem to be aiming to entice other hardware manufacturers by demonstrating that a full-featured smartphone can be built using components that are about a generation behind the current high end, and therefore cheaper, says Andrew Rassweiler, the iSuppli analyst who supervised the teardown.

For example, the teardown found that the Lumia 900 uses a single-core Qualcomm chip that costs $17 as its main applications processor; a phone with similar features running Google’s Android OS, such as Samsung’s Galaxy SII Skyrocket, uses a higher-end dual-core processor that costs $22.

“It appears what Microsoft and Qualcomm and Nokia are trying to do here — and this is being driven by Microsoft more than anyone else — is streamline the OS so it can run on a lighter processing platform,” Rassweiler told me. “The point being is to undercut the higher end phones.”

The choices don’t end with the processor. The phone contains only 512 megabytes of DRAM memory, where most phones would use one gigabyte. And the trend is expected to continue, as the next generation of Microsoft’s mobile OS will require even less memory.

Another example: The Bluetooth chip. Nokia is using a slightly older chip from Broadcom, and not the latest, greatest Bluetooth part. The difference between them is only $2.50, but it serves as another example showing that Nokia is aiming to compete on price.

For Nokia, the strategy seems to be one of aiming to compete against other phones on price, while offering similar features. The Lumia is thought to sell for $450 at retail without a subsidy, or about $200 lower than Apple’s iPhone 4S, which starts at $649 without a contract, depending on model, and costs between $188 and $245 to build.

Microsoft is also thought to be helping Nokia out, says iSuppli’s Wayne Lam, who also participated in the teardown analysis. While software costs are not considered in a teardown analysis, he says Microsoft is thought to be making less than $5 per phone in licensing fees on the Windows Phone 7 operating system, far lower than the $15 per device it is said to want. That would be in line with the $3 per phone price that Nokia is thought to have paid in licensing fees for the Symbian OS it used previously, and of which it was a partial owner. “Nokia is getting a fantastic discount,” Lam told me.

One place where Nokia didn’t skimp? The gyroscope chip, which determines how the phone is being moved. It contains the same gyroscope chip from STMicroelectronics that goes into the iPhone 4S. There are, apparently, some things on which you simply can’t compromise.

The analysts at the market research firm IHS iSuppli, considered by the investment community to be the most reliable of the organizations that conduct teardowns, were among that set. Today, somewhere in Southern California, an iSuppli analyst stood in line at a store and promptly took an iPad to a lab, where it was torn into, initiating the interesting process of estimating what it all cost to build.

Here’s what iSuppli’s team found: First off, there weren’t many changes from the last iPad, in terms of suppliers. “It’s most of the same characters we saw last time around,” analyst Andrew Rassweiler told me today. Wireless chipmakers Qualcomm and Broadcom both reappeared — Qualcomm supplying a baseband processor chip, Broadcom a Bluetooth and Wi-Fi chip, TriQuint Semiconductor suppling some additional wireless parts. STMicroelectronics once again retained its position supplying the gyroscope. Cirrus Logic supplied an audio codec chip.

The 16 gigabyte, Wi-Fi-only iPad that sells for $499 costs about $316 to make, or about 63 percent of the device’s retail price. On the upper end, the 4G-ready 64GB model that sells for $829 costs about $409 to make, or about 49 percent of the retail price.

The new cost figures represent an increase of between 21 percent and 25 percent, depending on the model, from the iPad 2, which iSuppli tore down last year.

So what did they find inside? An expensive Samsung display, for one thing. All those millions of pixels don’t come cheap. ISuppli analyst Andrew Rassweiler estimates that the display, which cost $57 on the iPad 2, has grown in cost to $87 on the latest iPad.

Rassweiler says that two other vendors, LG Display and Sharp Electronics, have inked display supply deals with Apple for the latest iPad, but only Samsung is thought to have fully ramped up production. Depending on the vendor, the display may cost as much as $90, he said.

One set of components remained essentially the same as before: Those that drive the touchscreen capabilities. Rassweiler says that three Taiwanese companies, TPK, Wintek and Chi Mei, supply parts related to driving the central interface feature of the new iPad, but he says to expect a major shift in how Apple handles the touch interface on future iPads.

The combined cost of cameras, including the front-facing and back camera, is pegged at $12.35, more than three times the cost of cameras found on the iPad 2, Rassweiler says. But it’s essentially the same setup as that on the iPhone 4, he says. As has been the case with cameras, the identity of the supplier wasn’t easy to determine because they try hard to hide identifying information from the prying eyes of teardown analysts. The candidates, however, include Largan Precision Co., a Taiwanese supplier of camera modules to wireless phone companies, and Omnivision. On the iPhone 4S, a research firm called Chipworks identified the supplier of the CMOS sensor in one of the cameras as having come from Sony.

As with other Apple devices, the main processor chip is an Apple-made A5X processor, one manufactured under contract by Samsung. The estimated cost of that chip is $23, up from $14 on the iPad 2.

Another part that’s more expensive than on the last iPad, but also better for a variety of reasons, is the battery. This one is estimated to have cost Apple $32, up from $25 on the iPad 2. But it constitutes a significant upgrade, Rassweiler says, with 70 percent more capacity than before. Apple benefited in part by lower prices in the lithium polymer material used to make the battery, offsetting the cost of adding a vastly improved battery.

ISuppli wasn’t the only outfit conducting teardowns of the iPad today. An enthusiast site called iFixit that encourages consumers to learn how to repair and upgrade their own electronics, flew technicians to Australia to conduct its own teardown analysis.

This is, of course, bad news if you’re in the business of making the commodity Dynamic Random Access Memory chips that go into PCs, servers and smartphones. A state of oversupply coupled with weak demand means the chips command lower prices than they otherwise would. The situation can be good, however, if you’re buying computers, because memory upgrades get cheaper.

The problem, as related by the research firm IHS iSuppli, is a rise in inventories of chips that its analyst Mike Howard describes as “alarming.”

ISuppli measures how much unsold inventory the chipmakers themselves have in their warehouses — which include Micron Technology in the U.S., Elpida in Japan, and the South Korean pair of Samsung and Hynix. The higher the number is, the more intense the downward price pressure becomes.

The stockpile of DRAM chips as of the end of the third quarter of 2011 stood at 12.8 weeks, which is nearly a third higher than it had been three months earlier and double what it was in early 2010. It’s also a lot higher than the typical average of 9.2 weeks.

There are a lot of factors creating the glut. Tablets like the iPad and Kindle Fire are eating into notebook sales, and don’t require nearly as much DRAM as notebooks do. And new operating systems don’t require the incremental boost in onboard memory as had been typical.

Nor is the economic uncertainty caused by the sovereign debt crisis in Europe helping. Flooding in Thailand has also disrupted the supply of hard drives which has in turn affected the overall demand for PCs and servers. Computer makers who can’t get hard drives simply won’t build as many computers, and thus won’t be buying the DRAM they otherwise would be.

Something similar happened in 2008 when the global recession sapped computer demand and caused a pileup of DRAM chips that lasted nine quarters. This cycle could turn out to be worse, iSuppli says.

Overall, iSuppli reckons the market for DRAM chips was worth about $6 billion in the fourth quarter of 2011, down by 11 percent from the prior quarter, and it’s only heading further south. The worst, Howard says, is apparently yet to come.

If the economy turns upward, or even is perceived to be on the mend, the glut can work its way down pretty quickly. In 2009 the stockpile dropped by more than half over three quarters.

And if it seems obvious that these chip companies should just stop making DRAM and let demand catch up with supply, it’s actually not that easy. Chip factories, or fabs, contain billions of dollars worth of manufacturing equipment running processes that are difficult to stop and start. Also, it’s more expensive to have them sitting there doing nothing but depreciating than turning out a product that brings in revenue, even if it’s running at break-even or a slight loss.

The country is now beginning the arduous job of cleaning up from the floods that killed upwards of 600 people and dealt a body blow to its industrial and manufacturing base.

One industry hit especially hard is the computer business. The world relies on factories in Thailand to turn out critical components used to build hard drives, and factories there are out of commission for now. This is not a trivial problem — the factories in question are not easy to replace, retool and restart once they dry out. Nor is the answer simply for the hard drive manufacturers to build new factories somewhere outside the flood zone.

This is the kind of supply chain disruption that the computer industry hasn’t seen in many years. I had a chance to talk with Steve Luczo, the CEO of Seagate Technology, for his view of the situation. Seagate has been relatively lucky in that its factories haven’t been directly impacted like those of Western Digital and Toshiba. But many companies that supply Seagate with necessary components have been hit, and it will be some time before they’re back on their feet.

Luczo told me that the computer industry as a whole — including companies who make PCs, servers, workstations and any other device that contains a hard drive, whether a set-top box or an enterprise storage device — can expect acute supply-chain disruptions to last well into 2012, and that it will take until the end of 2013 for the industry to return to its pre-flood operating posture. You read that right: It will be two years before the supply of hard drives is anywhere near “back to normal,” and there are simply no easy solutions for getting it fixed.

An estimate by the market research firm IHS iSuppli pegs the available supply at 125 million units, which is about 29 percent short of demand of 175 million units. By its reckoning, more than one-quarter of the world’s hard drive manufacturing capacity has been disrupted in one way or another, including 45 percent of the capacity devoted to making hard drives for personal computers. I spoke with Luczo by phone yesterday, and tossed in an extra eighth question because of the importance of the subject.

AllThingsD: Steve, at a high level, I think everyone understands the problem. There’s been a terrible flood in Thailand, and a lot of factories that make crucial parts for hard drives are out of commission. To that end, I think people expect this to be a temporary problem that works itself out in a couple of months. But you say it’s a much more complex problem than most people realize. You’re tracking this situation day to day, and probably hour by hour. So, how bad is it, really? And what’s likely to happen?

Luczo: What’s surprising to us is that even with all the data out there — we’re six weeks into it — there are a lot of fairly sophisticated companies that haven’t fully come to grips with the depth of the problem and the duration that is likely to occur. What is going to happen in the next couple of weeks is that the real shortage begins to show up right about now. There was already a lot of built inventory and a lot of finished goods moving through the system. And now all that is gone, and I think customers are starting to see shelves of parts go empty, and realizing that they’re not going to be filled for anywhere from one to two months. So the concern is heightened.

We heard Meg Whitman talk about this on HP’s earnings call Monday. She said HP stepped in and started doing some strategic buying. She says HP is going to see effects at least through the first half of next year. Apple talked about it on its earnings conference call, too. Are you hearing from them?

Tim Cook at Apple was way in front of this. I saw Tim the first week it happened, and took him through the situation, and in 15 minutes he understood the magnitude of it. Meg was on the second week of her job as CEO when I went to see her, and she got it right away. HP’s procurement VP, Tony Prophet, was also early to understand this. Companies like that reached out to us early on, because they understood that this is going to be an extended problem. They started asking for longer supply agreements. Deals that would typically last about a year, they’re now asking for two years.

How bad is it really going to be? What’s your outlier worst-case scenario, and then what do you think is a little more realistic?

If you think pre-flood, a mix [of products] that the customers need, the industry had the capacity to ship about 190 million units a quarter. Pre-flood, we expected the demand to be pretty consistent at about 180 million a quarter, with a bump in September 2012 for Windows 8. We now believe the March quarter is going to much more difficult than the December quarter, and December is going to be about 120 million or so. We think the March quarter will be about 120 million, in the best-case scenario. And that’s with customers mixing down pretty aggressively; and by that, I mean companies like Western Digital, who don’t have access to the sliders [a critical component in a drive], are shipping one- and two-headed devices so they can ship more units. So instead of shipping a drive that contains two disks and four heads, which is what the market needs right now, they’ll be shipping a one-disk, one-head or one-desk, two-head product. They’ll be maximizing the units they can sell, rather than shipping the product the customer actually needs. … So we see something like 130 million for March on the optimistic side, and then 150 million for June, 170 for September and then 190 million for December. And so by the end of 2012 you’re back to being close to industry demand. But even then, you’ve not included the impact of that missed 100 million units. And that will take another year to absorb, because it’s not like the industry is building new factories to chase that demand. We can’t over-invest to meet some bubble and then get stuck with excess capacity.

I think, intuitively, people expected companies like Seagate to just build more factories outside of the flood zone, but it’s not that simple, is it? Would this not be a moment to add capacity?

There are some in the investment community who think that’s what is going to happen, and that there will end up being a supply glut after all this is over, but it’s not the case. For us, it’s more a function of how to recover the supply chain and then work with the customer to get a good read on what their needs are for the next several quarters. If we see a multiquarter shortage that goes beyond what I described before, then we would think about maybe putting some capital in place. But we’re not going to do that to solve a temporary problem, because we end up being stuck with the excess capacity. Now if it turns out there is no recovery, and then the industry is more constrained than I first described — and that, by June, the industry is still 30-40 million units short and looks like it will be for the next six quarters — we might revisit. But then we’d want longer-term commitments to make sure we’re not overinvesting. But we’re not to that point yet.

What is this doing to prices? And what does that mean to the person who wants to buy a computer or server this year or next year?

If you look at a 10-year moving average trend, the industry has in general seen prices come down about 2 to 3 percent a quarter, and that is for a particular product. In 2009, there was a little price erosion, and that was because the storage industry recovered quickly from the recession. And there had been massive capital cutbacks, so there were big shortfalls through all of 2009 and into 2010. Then, when the Greece crisis happened, that put a big flatline on a lot of growth, and the industry had put in a lot of capital because everyone expected there would be growth. So, since spring of 2010, the price erosion has been higher than normal, which would show that supply is greater than demand. And what this flood has done is drive the supply curve down, while the demand curve has stayed constant. For OEMs [original equipment manufacturers, or the PC and server manufacturers like Apple, HP and Dell, who buy directly from Seagate], you’re seeing an average increase of about 20 percent, and in the channel [resellers who sell parts to smaller PC and server vendors], probably much higher. So all the sensational quotes you see about pricing are about those that occur in the channel, where we have no control whatsoever.

The markups in the channel are much higher? Are the channel guys taking advantage of this?

Yes, they’re higher, but I don’t think they’re taking advantage. I’ve heard stories about drives that we sell to OEMs for $60 that show up in the channel at $105. Normally the channel price is within about 10 percent of the OEM price. It’s just the law of supply and demand. They can’t get supply. The channel is getting about a third, at most, of the supply they would typically get. The OEMs are the ones with the supply agreements, so everyone in the channel is way short. In some market segments, supply is about 70 percent below what the demand is. And so those shortages are very acute. The channel is selling the few drives that are out there to whoever needs them the most and is willing to pay for them.

So what does all this mean for Seagate, specifically?

For us it’s a different story, because we’re going to be driving more volume than our competitors, because we’re not as directly affected, and we’re going to be making some  technology transitions. When we do that, it lets us take cost out of our product, so we can offer more capacity for the same or fewer parts. That helps us drive down pricing. Our goal is to recapture some of the more aggressive pricing of the last eight quarters, in order to sort of get our business back in balance. Our long-term business model calls for gross margins of 22 to 26 percent. And we use our manufacturing expertise to drive down our costs and then pass that on to our customers. This quarter, end users really won’t see it, because product has been built and has been on the shelves. As the shortages just started occurring, you’re starting to see prices increase in the channel. And then at the OEM there will be shortages in some high-value areas like enterprise storage or cloud computing. You’re going to have to see price increases, because there’s such big shortages.

One thing that occurred to me when I first wrote about this a month or so ago is that it represents an opportunity for the flash memory chip companies to make some inroads against hard-drive guys like you, mainly on notebooks. Is there a threat that flash could pick up some of the demand?

Some of it, but not very much. I think to the extent that there is a high value purchaser who can afford to pay $200 for 100 gigabytes, then that market will expand from 1-2 percent to 3-4 percent. Of the 35 to 40 percent shortage that exists, could you see a little of that get absorbed by silicon? The answer is yes. But there’s a cap. There’s just not enough of a raw supply of silicon to meet all the demand. Our industry will ship 400 exabytes this year. We would have shipped 450, were it not for the floods. Of that, 180 exabytes is notebooks. Reduce that by 30 percent, and you get about 55 or 60 exabytes. If you were to take all of the capacity from Samsung’s newest state-of-the-art flash factory, and dedicated it just to notebooks, it would only put out 7 exabytes a year. Plus, there are already other markets demanding flash, like  tablets and cellphones and other things. So it’s not like you can steal from those other markets. You’re not going to take a $32 product and replace it with a $350 product. Can you do it at the edges of the market? Sure. But the threat is capped by the amount of silicon available and the price point for flash storage, which is still an order of magnitude higher.

Yesterday, I published a story about the teardown analysis by IHS iSuppli of Amazon’s Kindle Fire tablet. And, as you may remember, the story related how, in the opinion of its analysts, it cost Amazon $201.70 to buy the parts and build the Fire — a sum which is only slightly above the $199 retail price of the device.

The other big news was how dominant the chipmaker Texas Instruments is among the suppliers. Its applications processor chip, wireless chips, and audio and power management chips add up to about $25, approximately 12 percent of the bill of materials (BOM), which is the aggregate cost of all the components. It’s a pretty solid victory for TI in the competitive tablet field, where, outside of Apple’s iPad, success has been rare.

Naturally, I asked Texas Instruments for a comment about this, and expected none. I’ve been writing teardown stories for six years (here’s the first I ever did); never once has the manufacturer of the device in question, nor any of its suppliers, given anything more than a “no comment.”

Manufacturers tend to hate teardowns because they’re invasive. Take a product apart and you find out who a company is working with — and you learn a lot about how they see things. With the Kindle Fire, for example, we learned that Amazon deliberately took a “less is more” approach to keep costs down, minimize its loss and pave the way to eventually selling the device at a profit.

Suppliers hate teardowns, too. There is nothing more secret — or more interesting to know — than what company is supplying a manufacturer with a key component. Companies can rise or fall on a strategic relationship with someone like Apple or HP — or Amazon. The first iPod, for example, put an otherwise unknown company named PortalPlayer on the map — until Apple replaced its chips with something else. Now that company is part of Nvidia.

Usually these suppliers are unwilling to rock the boat, and usually they’re covered by nondisclosure agreements. So when I do the typical reporter thing and call them for a comment, after a teardown clearly shows their chip or display or other component inside the product, the supplier always — 100 percent of the time, without exception — says, “No comment.” Probably they’d like nothing more than to brag about how their chip makes this or that product do amazing things, but usually they just can’t, won’t and just don’t say a word.

Until today. Today, in response to my questions of yesterday, I got a comment from Texas Instruments. And that meant I just had to share it. Here it is, courtesy of a company spokeswoman:

“We can confirm that TI’s OMAP4430 processor and WiLink 6.0 connectivity combo solution are inside of the Kindle Fire. … TI is thrilled to be a part of the Amazon Kindle Fire, which boasts powerful performance and engaging consumer experiences that are sure to make it a coveted device this holiday season.”

Not exactly riveting. But rare!

This essentially confirms what everyone has suspected for a while — that Amazon expects to lose a little money up front on the $199 Fire, in hope of selling in volume. It also hopes to make more money on sales of the digital media and physical goods consumers may order from Amazon on the device.

Andrew Rassweiler, the IHS iSuppli analyst who supervised the teardown, said the analysis is still under way, and that the firm may reduce its final estimate slightly. Update: It’s done: The final figure is $201.70.

That Amazon’s model with the Kindle Fire is essentially the opposite of rival Apple’s has been understood for some time. Apple’s iTunes store runs at or slightly above the break-even point, and encourages the sale of higher-margin hardware like the iPad, iPhone and iPod. The teardown study gives both a rough idea of how much Amazon can realistically expect to lose on the Fire, and also the extent to which it took steps to minimize those losses.

There are several examples of where Amazon clearly intended to minimize its hardware costs, Rassweiler says. For one thing, most tablets contain 8 gigabytes gigabits of DRAM memory. The Fire contains only four. It also contains only 8GB of flash memory used for storing content, where the iPad starts at 16GB and goes up to 64GB. Amazon also skipped other features, like a camera and Bluetooth connectivity, and more expensive wireless chips.

“All the choices have been made here to minimize the hardware cost,” Rassweiler says. “We expected to see a certain wireless module that’s commonly been seen in other tablets, and we were surprised that it wasn’t there. There was a cheaper one with fewer features that saved them a few bucks.” The chips were combined into a module manufactured by a previously unknown company called Jorjin, he says.

The box contents are also minimal. The box the Kindle Fire ships in is the same box it comes in when sold by third-party retailers like Best Buy. And the only accessories inside are a wall charger and a cord. Rassweiler says iSuppli initially expected the box contents to cost more than $5; instead, the cost is closer to $2 or $3. “Amazon’s approach was to take out everything they didn’t need,” he says.

But, as is always the rule with consumer electronics, prices come down. That $25 worth of TI chips will cost about $12 in the near future, meaning that Amazon will in time be able to sell the same device, but at a much lower cost to build. Of course, if it’s successful, consumers will want one that’s a little more fabulous, perhaps with a bigger screen, perhaps.

Inside the Fire, chipmaker Texas Instruments appeared to be the big winner, supplying numerous chips that combined for about $25, about 12 percent of the total materials cost. One TI chip, the OMAP4430, is the main applications processor in the Fire. It has previously been seen in the Droid Bionic, the LG Optimus and Research In Motion’s PlayBook. TI also supplied chips that help manage audio, power and Wi-Fi.

It’s a victory for TI, which appears to have beat out Qualcomm, who supplied Hewlett-Packard with the applications chip in its now-abandoned TouchPad tablet, as well as Nvidia and Broadcom, who have been competing for business with other tablet outfits.

South Korea’s LG Electronics supplied the display. LG has a relationship with E Ink Holdings, the company that has supplied the displays on Kindles, and also Barnes & Noble’s Nook, since the beginning. LG is also thought to supply displays for the iPad to Apple.

Along with the display are touchscreen components. Rassweiler says the touchscreen controller chip is from a previously unknown supplier known as Ilitek. The appearance of lesser-known suppliers for these components is increasingly common, Rassweiler says. A surge in demand for touch devices has brought forth a bumper crop of new companies supplying the components that make them work.

Amazon declined to comment directly on iSuppli’s findings, but CFO Thomas Szkutak said in an Oct. 25 conference call with analysts that the company is counting on the device to serve as a platform for the sale of content; Szkutak emphasized the “lifetime value” of the device.

It may just work. Amazon is said to be seeing higher-than-expected demand for the Fire, and is reported to have ordered another million units from its manufacturing partner, Taiwan’s Quanta Computer. Still, it will take many more than that to make a dent in iPad sales.

Amazon shares fell by more than 4 percent today. The shares are down from a recent peak, after the company disclosed an earnings miss on Oct. 25.

Click to see a bigger version of the exploded view, courtesy of iSuppli, below:

As you may remember, for whatever reason, probably competitive concerns, Apple takes great pains to obfuscate the identity of the company that supplies it with the cameras inside the handset. When IHS iSuppli shared the findings of its teardown analysis with me yesterday, its analysts had no idea who had built that particular part. Two candidates were mentioned: Largan Precision Co. of Taiwan and OmniVision.

A hint had come from a teardown analysis by another company, Chipworks, which had taken the iPhone apart, put its individual chips under a microscope and found a Sony-made imaging sensor inside it.

One reader wrote in to point out this story from April in The Wall Street Journal, detailing an interview in New York between AllThingsD’s own Walt Mossberg and Sony CEO Howard Stringer, where Stringer is quoted talking about how Sony supplies Apple with cameras. “It always puzzles me,” Stringer said at the time. “Why would I make Apple the best camera?”

So there’s some confirmation, of sorts, that Sony is supplying Apple with at least a part of one of the cameras in the iPhone. Analysts have speculated that Apple, always careful about its supply chain arrangements, has probably tapped two suppliers for the main camera, and that Sony and OmniVision are sharing the job.

Now we have even more information. In an update to its analysis of the phone, Chipworks said today that OmniVision appears to be the supplier of the secondary, front-facing camera in the iPhone. As Barron’s noted today, OmniVision’s stock shot up on that revelation.

Inside, the phone is similar too, but there have been some strategic changes from one generation to the next that have important implications for Apple’s many suppliers. According to a teardown analysis conducted by the research firm IHS iSuppli, chipmaker Intel, which last year acquired the wireless operations of the German chip concern Infineon, has been almost entirely bounced out of the 4S in favor of a set of chips from Qualcomm. The shift to Qualcomm had been rumored as far back as last September.

Before Intel acquired its wireless unit, Infineon had previously supplied Apple with a chip known as a baseband processor that Apple had used in combination with chips from Skyworks and Triquint to work with wireless phone networks. “Qualcomm is the big winner here,” says Andrew Rassweiler, an analyst with IHS iSuppli who conducted the teardown. “It is selling Apple a whole suite of chips that adds up to about $14 to $15 per iPhone.”

Intel spent $1.4 billion to acquire Infineon’s wireless chip operations last year in a move seen as meant to shore up its presence in the wireless phone industry overall. It has struggled to win business for its Atom line of microprocessors, which are aimed at mobile devices like smartphones and tablets.

Infineon still has a small chip in the iPhone, but Rassweiler says it’s far less significant and a lot less costly than the one it supplied Apple before. “It’s almost like Apple threw them a bone with a 50-cent part after they lost a much more high profile chip that cost about $10,” he says. Intel had no comment.

ISuppli regularly conducts teardown studies of wireless phones and other consumer electronics devices in order to find out who a manufacturer’s vendors are — like most manufacturers, Apple prevents its suppliers from identifying themselves, much as they’d love to — but also to determine what each part costs. The combined cost of components — analysts check on the list prices of each part — is known as a bill-of-materials (BOM) estimate that gives a fair idea how much a manufacturer, in this case Apple, makes in gross margin on each device sold. Apple doesn’t disclose its gross margin on a per-product basis but when it reported its quarterly results yesterday it said its overall gross margin was 40.3 percent.

In the case of the iPhone 4S, Rassweiler estimates that the BOM cost ranges from $188 for the 16 gigabyte version of the iPhone 4S to $207 for the 32GB version and $245 for the 64GB version. Apple and its carrier partners sell the phones for $199, $299 and $399 respectively, typically with a two-year contract for wireless service that carriers use to subsidize the cost they pay Apple.

The costliest components are the ones that determine the price: Memory chips. Apple has been known in the past to rely mostly upon South Korea’s Samsung Electronics, the world’s largest supplier of memory, and from Japan’s Toshiba. In the phone that Rassweiler’s team tore down, the memory chips came from Samsung rival Hynix Semiconductor. “That struck us as a bit of a surprise,” Rassweiler says. It’s hard not to wonder if adding Hynix to the stable of iPhone memory suppliers is a partial response by Apple to the complicated patent fight it is waging with Samsung in courtrooms around the world.

Even so, Samsung appears to be have maintained its role as the manufacturer of the Apple-designed A5 processor that provides the iPhone 4S, and also the iPad 2, with most of its computing horsepower. Some published reports in recent months had suggested that because of the patent fight, Apple might end a relationship that dates back to the original iPhone and move its chip manufacturing contract to Taiwan Semiconductor Manufacturing Co., the huge chip manufacturing foundry. Rassweiler says there’s no sign on the latest A5 chips that that has occurred. “The markings are the same as what we saw in the iPad 2,” he says. The estimated cost for the A5 chip is $15 each, he says.

Apple started designing its own chips for the iPhone and iPad products beginning in 2010 with the release of the first iPad. The chip is thought to have been designed by teams from PA Semi and Intrinsity, two privately held chip design firms that Apple acquired in 2008 and 2010 respectively.

However, it’s also clear that the A5 chip is taking on more of the heavy computing lifting inside the device than the previous A4 chip, Rassweiler says. For example: The iPhone 4 contains a chip from privately held Audience Semiconductor, based in Mountain View, Calif., that handled noise cancellation. There’s no such chip inside the iPhone 4S, Rassweiler says, so it appears that noise-cancellation duties may have been moved to the beefier A5 chip itself.

Triquint Semiconductor provided a set of chips that make up a wireless transmit module that works with the wireless phone networks. Triquint has traditionally been an iPhone supplier, Rassweiler says, but the value of what it supplies to Apple appears to have dropped. One wireless chip company that has seen the value of what it supplies to Apple increase is Avago Technologies. Like Triquint, it too has been an iPhone supplier, but the overall value of the chips it supplies has gone up in the 4S.

STMicroelectronics, the European chipmaker, maintained its role as the supplier of gyroscope chips that help determine the phone’s position and rotate the screen for playing games and displaying pictures and videos. AKM Semiconductor again supplied the compass chip. Texas Instruments continued in its role supplying the chip that controls the iPhone’s display, and an audio chip.

One vendor could not be identified. Rassweiler says that Apple appears to have taken pains to hide the identity of the company that supplies the parts that power the iPhone 4S’s highly regarded 8 megapixel camera. This is not new, and the candidates include Largan Precision Co., a Taiwanese supplier of camera modules to wireless phone companies, and Omnivision. “We don’t know exactly who makes it,” Rassweiler told me. Whoever the supplier is, Rassweiler estimates the camera added $17.60 to the cost to build the iPhone. And they’re likely to make a lot on the deal. IHS iSuppli is forecasting that Apple will sell 81 million iPhone 4Ss around the world next year.

Update: A few of you have written in saying that it was Sony who supplied the camera. Maybe. The folks at Chipworks dissected the camera module and found a Sony-made CMOS image sensor inside it. That doesn’t make the whole module a Sony’s however. It could be a Sony camera or it could be that whoever made the camera used a Sony sensor. And last week Barron’s reported on some debate among analysts over whether or not Apple has split the camera supply contract 50-50 between Omnivision and Sony.

Suddenly it seems incredibly popular: HP’s own Web site appears to have sold out of them. Engadget noted that the TouchPad is the hottest gadget on Amazon today, but not for the newly slashed price. At the moment, the 16GB unit is going for $454 on Amazon, and the 32GB version for $502.

Whatever this last minute mania might do to cushion the damage, the fact is that HP is taking a financial bath on the TouchPad, and not a small one, either. According to analyst Shaw Wu of Sterne Agee in San Francisco, HP’s initial order from its Taiwanese contract manufacturer, Compal, was for between 500,000 and one million units.

As we now know, sales of what we called the “OuchPad” were terrible, particularly at retailer Best Buy and pretty much everywhere else, prompting a sudden decision by HP management to kill the product and, in fact, all hardware running the webOS operating system.

So how much will HP end up losing on the TouchPad? We’ll probably never know for sure, but let’s do a little back-of-the-envelope math in order to arrive at an educated guess.

We know roughly what it cost to build each TouchPad, courtesy of a teardown analysis conducted last month by the research firm iSuppli. A 16GB TouchPad cost $306.65 to build, while the 32GB version cost $328.65.

Now let’s assume that the million-unit order is correct and that it was evenly split between 16GB and 32GB units. (It probably wasn’t, but it makes the calculation easier.) That would make HP’s combined hardware cost $317.7 million. Let’s give HP the benefit of the doubt and assume that before last week’s events it sold 50,000 units at an average price of $400. So we’ll subtract $20 million. That leaves us with $297.7 million.

Now let’s do the same calculation, this time assuming the order from Compal was for an evenly divided 500,000 units. In this case, the total hardware cost would be about $159 million, which, after knocking off that same $20 million sold, leaves us with $139 million. Thus, our range is somewhere in the neighborhood of $140 million to $300 million spent on hardware alone, depending on how many units were ordered.

Whatever the actual figure, you can bet that the cost of written-off hardware is a sizable contributor to the $1 billion cash charge HP said it will be taking in the fourth quarter, related to the shutdown of the webOS hardware business.

What else goes into that $1 billion? Costs associated with people who worked on it, who will soon be out of a job, for one thing; plus getting rid of any related assets, and so on.

And though it doesn’t factor into that $1 billion charge, it would be interesting to find out how much HP’s advertising agency spent on filming and buying TV slots for the TouchPad TV commercials starring Lea Michele from “Glee” and the Filipino boxer-turned-politician-turned-singer Manny Pacquiao. Those folks don’t exactly turn up for free. Nor do primetime ad slots. Also, as Reuters reported, those ads were still running on CNBC as of Friday.

Update: A few more thoughts on what other line items are likely within that $1 billion cash charge, courtesy of Wayne Lam at IHS iSuppli. There would have been other TouchPad models in various states of the design and manufacturing pipeline, though probably more designed and prototyped than manufactured. Then there was the associated research and development work going on with the various models of webOS phones that HP sold, not least of the which was the Veer — which oddly enough was in the schwag bag given away at D9 — as well as the Pre 3. Lam also says that HP was thought to have an exclusive contract with Qualcomm for the supply of the chips for the phones. Shutting down the hardware business might invoke some expensive contract cancellation terms, he says.

What would the release of a headline-grabbing new consumer electronics device be without a handful of people buying them only to take them apart to see what’s going on inside?

So it goes with Hewlett-Packard’s TouchPad, the webOS-based answer to the king of tablet computing, Apple’s iPad. The teardown team at market research firm IHS iSuppli picked one up only to skulk around its insides. The picture at right (which you can click to make bigger) is the exploded view of the device.

ISuppli isn’t the only place that does these teardown reports, but it’s one of the few that also estimates the combined cost of the parts and materials used to build the device. These bills of materials, or “BOM” estimates, as they’re called in industry parlance, are important indicators of the kind of profit margin a company can expect to see on a device on a per-unit basis. The BOM doesn’t take into account other costs that are impossible to estimate, such as software development, licensing of any intellectual property, distribution or marketing.

So what does the TouchPad cost to build? The teardown by iSuppli pegs the cost of the components used in the 16 gigabyte version, which sells for $499 at retail, at $306.65. Meanwhile, the 32GB version, which sells for $599, costs $328.65 to build. (The difference, obviously, is memory.) HP didn’t immediately comment on iSuppli’s findings.

As is often the case with tablets and notebooks, the display is the most expensive component in the device. In this case, HP went with a proven winner. It selected a 9.7-inch display from LG Electronics that is thought to be either identical or very similar to the LG-made display Apple used in the first-generation iPad. Andrew Rassweiler, iSuppli’s senior director for teardowns, pegged the cost at $69.

Internally speaking, the similarities to the iPad end there, Rassweiler told me. The components connected to the display that enable the touch-sensitive interface are different from those on the iPad. Where Apple has favored chips from Broadcom and Texas Instruments, HP has gone with a set of six chips from Cypress Semiconductor to control the touchscreen. It costs $11.75, which makes it one of the more expensive touchscreen driver products on the market, Rassweiler said. Additionally, materials used to build the capacitive glass assembly that overlays the LCD display cost another $63.50. All in, components related to the display come to a subtotal of $144.25, iSuppli estimates.

The next most expensive set of components is the memory. For the NAND-flash memory used for storing data, HP selected SanDisk’s iNAND chips. The iSuppli teardown reckons that HP paid $23 for 16GB, and $45 for 32GB. Samsung provided 8GB worth of system memory (DRAM) for both models, at an estimated cost of $26.

he TouchPad’s main application processor is interesting both for who made it — Qualcomm — and for what it isn’t: A full-fledged member of its Snapdragon chip family. “This appears to be a Snapdragon derivative without the baseband functions that would normally be seen on a Snapdragon,” Rassweiler told me. The chip costs $20, iSuppli estimates. Chances are a fully enabled Snapdragon chip will be used in a future model, he said.

For now, as The Wall Street Journal’s Walt Mossberg noted in his review of the TouchPad last week, the device is Wi-Fi only, but a model with the ability to connect to cellular networks is planned.

It’s also clear from the teardown, Rassweiler said, that there’s room for the addition of other components in the future. And other things are missing.

“We noticed there’s a gyroscope chip and an accelerometer, but we couldn’t find any GPS chips,” he said. “Plus, when we looked at the design we noticed there seems to be a lot of breathing room inside to add additional parts without having to change the design.” More stuff to expect from a future 3G-ready TouchPad.

Qualcomm supplied several other chips. Its newly acquired Atheros subsidiary provided the Wi-Fi chips, at a cost of $2.60, and two power management chips that cost another $5 combined. Texas Instruments supplied four chips — three related to power management and one display interface chip — that added $4.50 to the cost.

Of course, the TouchPad is not only intended to be a successful device on its own for HP, but represents a new strategic opportunity. As in, HP wants to license the webOS on the TouchPad to other manufacturers.

That makes it something of a showcase for the software’s capabilities. HP CEO Léo Apotheker discussed this possibility in his appearance last month at the ninth D: All Things Digital conference.

You can see his comments on the subject from the highlight clip below. And you can see the full interview here:

]]> http://allthingsd.com/20110703/hps-touchpad-teardown-its-deepest-secrets-revealed/feed/ 0 http://allthingsd.com/20110509/apple-htc-and-rim-unscathed-by-smartphone-stall/ http://allthingsd.com/20110509/apple-htc-and-rim-unscathed-by-smartphone-stall/#comments Mon, 09 May 2011 19:40:05 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=62552 Though it played havoc with Nokia’s smartphone business, a rare quarter-to-quarter decline in smartphone shipments–the first sequential decrease since 2009–did nothing to slow the iPhone juggernaut.

According to research firm IHS iSuppli, iPhone shipments rose 15 percent in the first quarter, even as smartphone shipments declined 1.5 percent. That was the strongest showing among the top five smartphone companies, though HTC and Research in Motion both reported gains as well–6.2 percent and 4.2 percent respectively.

And the weakest?

That dubious honor belongs to Nokia, whose smartphone shipments declined by 14.5 percent. An ugly slip, and one that puts Apple that much closer to attaining smartphone market leadership.

“Apple’s smartphone market share in the first quarter was boosted by the introduction of its first iPhone model with code division multiple access (CDMA) as well as by the addition of Verizon Wireless as a carrier in the United States,” said IHS analyst Tina Teng. “Not only did this allow Apple to expand its target market and boost shipments, it also placed additional pressure on rival smartphone brands–including Motorola, Samsung, LG and HTC–that focus on Verizon Wireless as a major customer.”

]]> http://allthingsd.com/20110509/apple-htc-and-rim-unscathed-by-smartphone-stall/feed/ 3 http://allthingsd.com/20110502/apple-mems-the-word/ http://allthingsd.com/20110502/apple-mems-the-word/#comments Mon, 02 May 2011 18:22:00 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=61514 Apple has surpassed Nintendo to become the world’s second-largest purchaser of MEMS, the microelectromechanical sensors used as accelerometers, microphones and gyroscopes in the iPhone, iPad and iPod touch. And if sales of those devices continue to trend the way they have been, it may soon overtake Samsung as the largest of all. Apple purchased $195 million worth of MEMS sensors in 2010, according to IHS iSuppli.

That’s 116.7 percent more than it bought in 2009 and just $5 million shy of the $200 million purchased by Samsung Electronics.

“Consumers in 2010 happily bought up Apple products including the iPhone 4, the iPad and iPod Touch,” said iSuppli analyst Jeremie Bouchaud. “Much of the appeal of these products lies in their sophisticated user interfaces, which rely heavily on MEMS sensors, specifically accelerometers, gyroscopes and microphones. This caused Apple’s purchasing to boom in 2010.”

]]> http://allthingsd.com/20110502/apple-mems-the-word/feed/ 0 http://allthingsd.com/20110328/the-nintendo-3ds-appears-pretty-profitable-judging-by-the-teardown/ http://allthingsd.com/20110328/the-nintendo-3ds-appears-pretty-profitable-judging-by-the-teardown/#comments Mon, 28 Mar 2011 13:30:05 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=4430 Nintendo’s latest handheld gaming device has hit the market in Europe and North America and as so often happens, before the weekend was over my in-box contained a detailed teardown report from the team at IHS iSuppli.

As usual, the idea behind the teardown is not only to figure out who Nintendo’s component suppliers are and what parts are being used, but to estimate how much all the components cost to help guess how much of a profit margin Nintendo is making on each unit. And it looks like a decent margin. ISuppli says the cost of all the parts in the device itself plus what’s in the box amount to $103.25 for a device that’s selling at retail for $249. The cost works out to an increase of about $25 over the Nintendo DSi, the most recent Nintendo handheld, released in 2009, which cost about $78, when iSuppli tore it apart that year.

While most of the components come from Japan, it’s not entirely clear if the supply of any of the parts used come from areas affected by the earthquake and tsunami, says Andrew Rassweiler, an iSuppli analyst who supervised the teardown. “Many of these component should have a greater risk exposure to supply chain problems, though we don’t know about any specific disruptions at this point,” he said.

The most expensive component, as is often the case with consumer electronics, is the displays. The 3DS uses two Sharp displays that cost a combined $33.80. The headliner is the top screen 3D. It’s a 3.5-inch 800-by-240 pixel display that uses an LCD-based parallax barrier panel sandwiched to the back of the color LCD which alternates between the left and right images at a high rate of speed to produce the 3D effect. “It looks like a conventional LCD from the outside, but when you open the display you see that on one side of the glass is essentially the conventional color element, and on the other side of the glass is a monochrome element,” Rassweiler told me. “It’s a clever bit of display engineering.”

The handheld’s main chip is an applications processor. It’s a custom ARM-based chip manufactured by Sharp, that at a cost of $10.02 is only slightly more expensive than the chip in the previous Nintendo DSi. However, Nintendo has quadrupled the amount of flash memory in the 3DS versus the DSi to 16 gigabytes, and Samsung, the world’s largest manufacturer of flash, supplied it. Fujitsu supplied another type of memory known as fast-cycle RAM. Rassweiler says for this particular type of memory, Nintendo has used a type of chip that’s only made by Fujitsu, which is odd because FCRAM is widely available, and its unusual for consumer electronics manufacturers to “single source”–that is, rely upon a single supplier for an important component. The combined cost of memory on the 3DS worked out to $8.36, more than twice the cost of the memory found on the DSi.

Three chips related to the user interface cost a combined $6.81: an accelerometer from STMicroelectroncis, a gyroscope from Invensense, and an audio chip from Texas Instruments. Atheros, the Wi-Fi chipmaker that’s being acquired by Qualcomm, supplied a $5 Wi-Fi chip. TI and NEC supplied power management chips that cost $3.63. The 3DS contains three cameras, and though it’s not clear who supplied them–camera suppliers have gone to great lengths to hide their identities in recent years–iSuppli reckons their combined cost at $4.70.

Since I often get asked this question, let me say that iSuppli’s analysis focuses strictly on the materials used and doesn’t account for the cost to develop software or to license any patents. Nor does it account for the cost of any shipping or distribution or marketing. It’s just the raw cost of the hardware.

]]> http://allthingsd.com/20110328/the-nintendo-3ds-appears-pretty-profitable-judging-by-the-teardown/feed/ 1 http://allthingsd.com/20110321/japans-quake-cuts-into-supplies-of-raw-materials-used-in-chips/ http://allthingsd.com/20110321/japans-quake-cuts-into-supplies-of-raw-materials-used-in-chips/#comments Mon, 21 Mar 2011 17:30:21 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=4175 After more than than a week of gathering anecdotal reports about shortages here and there, the research firm IHS iSuppli has concluded that 25 percent of the world’s supply of silicon wafers used to make chips has been been suspended by the effects of the earthquake and tsunami in Japan.

Manufacturing has stopped at Shin-Etsu Chemical Co. Ltd.’s Shirakawa facility, and MEMC Electronic Materials has stopped manufacturing at its plant in Utsunomiya. Together, the two facilities account for a quarter of the global supply of silicon wafers, the basis of building chips.

The Shin-Etsu Chemical plant by itself supplies about 20 percent of the world’s silicon supply, and it specializes in making 300-millimeter wafers, which are the dinner-plate-size discs of silicon used in the more advanced chip factories, commonly referred to as fabs. Shin-Etsu, iSuppli says, supplies several memory chip manufacturers, particularly those that make flash memory, used in everything from iPhones to memory cards, and also DRAM, the main memory used in PCs and servers. ISuppli says the global market is going to be hit hard, which in turn means you can expect prices on both flash and DRAM to soar. Shin-Etsu has said it would set up production at other plants, but it’s hard to know how long that will take.

MEMC’s Utsunomiya facility accounts for five percent of worldwide wafer supply. MEMC said it expects that shipments from this facility will be delayed during the near term.

In a related note, iSuppli has quantified the impact of the shutdown of operations at Mitsubishi Gas and of Hitachi Kasei Polymer. The two companies produce about 70 percent of the world’s supply of the raw materials used to make printed circuit boards. The key material in question is called copper-clad laminate or CCL. The two companies say they’ll be able to ramp production back up within two weeks. The good news is that electronics manufacturers have enough circuit boards in inventory that they can probably keep their operations running without interruption.

ISuppli goes on to check in on a few chip companies in the affected region: Elpida Memory says its fab in Yamagata has been damaged, and the lack of electricity is hurting production. It’s running at about half its normal capacity.

The quake also damaged about 40 percent of the production capacity of Renesas Electronics. Production has stopped at its Tsugaru fabs where it makes analog and discrete chips, at its Naka fab where it makes system-on-chip and microcontrollers, and at its Takasaki and Kofu fabs, which also making analog and discrete parts.

Half of Fujitsu’s production capacity has been damaged. While its fabs and wafer equipment are intact, the lack of power, gas and wafers have slowed things down considerably, and it expects to recover in about three to four weeks.

One company that is holding up well: AKM Semiconductor, notable for the compass chips it produces for Apple that are used in the iPhone and iPad 2. Its main production fab in Nobeoka is well out of the quake zone and hasn’t suffered any loss of power.

]]> http://allthingsd.com/20110321/japans-quake-cuts-into-supplies-of-raw-materials-used-in-chips/feed/ 5 http://allthingsd.com/20110316/mobile-dram-the-smartphone-component-youve-never-heard-of-is-big-business/ http://allthingsd.com/20110316/mobile-dram-the-smartphone-component-youve-never-heard-of-is-big-business/#comments Wed, 16 Mar 2011 11:30:36 +0000 Ina Fried http://mobilized.allthingsd.com/?p=5094 If you have a new PC, there is a reasonable chance you know how much memory it has. It’s one of the things we have been taught to ask about when we buy a new computer. More memory means the thing runs faster.

However, even most hard core techies can’t tell you how much DRAM is in their phones or tablets. They might know about the flash memory that is used to store apps and music. But most would shrug their shoulders if asked how much memory is in there to power things like video playback and multitasking.

Crack open any smartphone or tablet, though, and you will find significant amounts of DRAM (an acronym that stands for Dynamic Random Access Memory). It is that memory that, as with a PC, allows a computer to handle multiple tasks quickly. On the cell phone side, it also has to perform its task while using as little power as possible. That has created a market for low-power chips–so-called mobile DRAM.

“I call it the silent enabler,” said Mueez Deen, a director in Samsung’s mobile memory unit (pictured above). “Nobody asks for it but you need a lot of it.”

Indeed, the market for such memory has been exploding. Mobile DRAM shipments this year are seen reaching 2.9 billion gigabits, up from 1.7 billion gigabits last year, according to IHS iSuppli. Some of that is due to the rapid growth in the number of smartphones being shipped, while another chunk is due to the fact that the amount of memory needed in each phone is growing. By 2014, smartphones are seen consuming 36 times as much memory as they did last year.

“Mobile DRAM, up until 2009, was kind of a sleepy backwater of the DRAM (market),” said iSuppli’s Mike Howard. “Phones weren’t really doing a lot back then.”

That is clearly changing–and quickly. Today’s smartphone is trying to juggle between desktop-caliber Web browsing, video chat and even 3D gaming–all of which demands ever more memory.

Not that long ago, it was considered ample if a phone had 512 megabits or a gigabit of flash memory. Now, four gigabits isn’t uncommon for high-end smartphones. Some, like the Atrix, pack eight gigabits of flash and smartphones with 16 gigabits are on the horizon, Deen said.

At the beginning of 2009, DRAM chips that were customized for mobile devices accounted for about five percent of the overall market, in terms of number of bits. By the first quarter of last year, its share had tripled. Its share is poised to grow even further as smartphones continue their rapid growth, while PCs tend to grow 10-12 percent a year at best.

Tablets will increase the mobile DRAM market even further. Although smaller in number than smartphones, tablets tend to use even more memory per device. And given the need for good battery life, mobile memory chips are still a requirement. Slates are seen accounting for 3.5 billion gigabits of DRAM in 2014–ten times what they accounted for last year.

For the memory chip makers, mobile DRAM has been a bit of a respite from the roller coaster of the PC memory market, which sinks or swims based on how much capacity is out there. On the mobile side–at least so far–handset makers have been dealing directly with chipmakers, with most of the chips being built to forecast demand, meaning much more stable pricing. Currently, chipmakers are getting anywhere from two to two and a half times as much for mobile DRAM as they would for the same capacity PC chip.

Roughly speaking, Samsung has about half the market for mobile DRAM, according to iSuppli, while Hynix has a quarter of the market, Elpida about 20 percent and Micron around 5 percent.

So, if mobile DRAM is such a big market, why does it never get talked about. In large part, it is because it is invisible to the consumer. It’s not something that gets talked about and handset makers simply choose the amount they think is appropriate for the device they are building. And, unlike a PC, it’s not like users can crack open their phones and add more if they like.

Apple, for example, doesn’t even say how much DRAM is in its new iPad. However, tear-downs reveal it to be 512 megabytes (UPDATE: I initially had my bits and bytes confused here). Interestingly, that amount is half of what is crammed inside rival tablets from HP, Research In Motion and Motorola.

Howard figures that Apple is probably somewhat better able to use its memory given its hardware-software integration and also says the company also is aiming to provide just enough performance while still hitting key price points. (Most iPad rivals tend to have a higher bill of materials than Apple has for the iPad.)

That said, Howard also said that the added memory is giving the other tablets a boost.

“It hasn’t gone to waste,” he said. “The DRAM is definitely adding a lot of performance.”

]]> http://allthingsd.com/20110316/mobile-dram-the-smartphone-component-youve-never-heard-of-is-big-business/feed/ 0 http://allthingsd.com/20110310/dells-number-two-in-the-pc-market-again-thanks-to-the-ipad/ http://allthingsd.com/20110310/dells-number-two-in-the-pc-market-again-thanks-to-the-ipad/#comments Fri, 11 Mar 2011 01:20:46 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=3880 Having languished in third place behind Hewlett-Packard and Acer for some time, Dell finally scrambled its way back to the PC market’s number two spot during the fourth quarter of 2010, a new survey by research firm iSuppli says. What’s strange is the unusual quarter from which Dell got some help: Apple’s iPad.

Acer had a tough time in the consumer market as the iPad cut into its consumer netbook sales, giving Dell, still strong in the healthy market for corporate PCs, the opportunity it needed to edge ahead of Acer by nearly two percentage points. ISuppli analyst Matthew Wilkins says it looks like a “firm lead.” Dell also edged out Acer for the number two spot for the entire year, iSuppli says. (Table courtesy iSuppli.)

Overall, iSuppli says the fourth quarter set a record for overall PC shipments with more than 93 million units, up nearly 5 percent from the same period in 2009. For the year, global PC shipments amounted to 345.4 million units, up 14.2 percent from 302.4 million in 2009.

Lately PC market analysts have been blaming Apple and its industry-changing iPad — the second iteration of which goes on sale tomorrow – for damaging the fortunes of PC makers. In this odd case it’s being seen as hurting one to the advantage of another. I have to wonder if Michael Dell feels at all thankful.

]]> http://allthingsd.com/20110310/dells-number-two-in-the-pc-market-again-thanks-to-the-ipad/feed/ 8 http://allthingsd.com/20101217/2010-was-a-boom-year-in-chip-sales/ http://allthingsd.com/20101217/2010-was-a-boom-year-in-chip-sales/#comments Fri, 17 Dec 2010 16:56:19 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=771 When 2010 ends, worldwide sales of chips will have grown by their largest single-year increase ever, the market research firm iSuppli says in its latest survey of the global semiconductor market. Chip sales grew to $304 billion, up from $229.5 billion in 2009, the most significant year-to-year increase on a dollar basis ever, and at 32.5 percent, the second-largest on a percentage basis.

Memory chips, both DRAM and Flash memory, had a lot to do with this. DRAM sales grew by 80 percent, and Flash memory grew by 40 percent. But every market segment save for one saw double-digit growth. Good news for Samsung, Micron and Hynix.

The one thing I’ve learned in watching chip markets over a dozen years or so is that booms don’t last. ISuppli is predicting a much slower growth rate of 5 percent for 2011.

]]> http://allthingsd.com/20101217/2010-was-a-boom-year-in-chip-sales/feed/ 0 http://allthingsd.com/20101215/intel-gains-chip-share-hard-drive-sales-surge-isuppli-says/ http://allthingsd.com/20101215/intel-gains-chip-share-hard-drive-sales-surge-isuppli-says/#comments Wed, 15 Dec 2010 17:35:46 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=602 The market for microprocessors has reached what market research firm iSuppli is describing as a stalemate in its quarterly survey of market share statistics. Shifts in share are being measured in tenths of a percent between Intel, Advanced Micro Devices and assorted others. Intel gained slightly in the third quarter from the same period last year to 80.1 percent, while Advanced Micro Devices lost a little less than a full percentage point with 11.3 percent. Good news for all concerned: Revenues are up 23 percent overall.

Note that iSuppli counts microprocessors differently than some of the other research firms. Its “other” category includes not only PC chip also-rans like Via Technologies, but also general purpose RISC chips like IBM’s Power chips that go into servers.

There’s better news, however, for the beaten-down hard-drive industry. After seeing shipments decline through the first half of the year, fourth-quarter shipments are up, as are revenues, iSuppli says. It’s clearly the result of the holiday-season demand, but welcome news, especially in light of all the worries that tablets–like Apple’s iPad–which use flash memory for storage, would whack hard-drive sales. (Though, as Digital Daily’s John Paczkowski noted this morning, the hard-drive guys still have lots to fear from tablets.)

Western Digital is holding on to its top spot as the world’s leading supplier, edging out Seagate, which has seen its share of troubles lately.

Seagate failed to come to terms with TPG Capital last month on a plan that would have taken the company private, and also spurned a takeover offer from Western Digital. Last week it moved to refinance more than $2 billion in debt, more than $500 million of which is due before the end of the year, with a combination of bonds and bank loans.

]]> http://allthingsd.com/20101215/intel-gains-chip-share-hard-drive-sales-surge-isuppli-says/feed/ 0 http://allthingsd.com/20101110/tv-bargains-come-early-this-year/ http://allthingsd.com/20101110/tv-bargains-come-early-this-year/#comments Wed, 10 Nov 2010 13:00:40 +0000 Miguel Bustillo http://voices.allthingsd.com/?p=32310 Retailers and manufacturers are slashing flat-screen television prices more aggressively than usual this holiday season in hopes of avoiding a pileup of inventory.

Wal-Mart Stores Inc., Best Buy Co. and Amazon.com Inc. are touting deals ahead of Black Friday to clear out older and cheaper sets before an anticipated flood of deeper price cuts in coming weeks.

“We expect a lot of aggressive pricing” by Black Friday, says television analyst Riddhi Patel of market-research firm iSuppli. “You will see 32-inch value-brand televisions for $199, and regular name brands will be more like $249 and $299.” She forecasts that 42-inch higher-end models will fall to $500, and some 55-inch sets with LED backlighting will retail for less than $1,000, half what many cost just last year.

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]]> http://allthingsd.com/20101110/tv-bargains-come-early-this-year/feed/ 0 http://allthingsd.com/20101006/apple-tv/ http://allthingsd.com/20101006/apple-tv/#comments Wed, 06 Oct 2010 10:00:29 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=50219 Apple’s new Apple TV is about a quarter of the size of its predecessor.

And it costs about a quarter as much to make it.

According to iSuppli, the bill of materials for the latest iteration of Apple’s $99 “hobby” is $64, significantly less than the $237 it cost the company to build the 2007 model.* That’s quite a disparity, one evidently driven as much by an adjustment of product vision as build (dumping that costly hard drive obviously didn’t hurt either). Where the original Apple TV was built like a small desktop PC, its successor is built more like an iPad, with a few of the same components; the two devices have an A4 processor in common, as well as Wi-Fi/Bluetooth and power management chips.

That evolution has given consumers a much-improved device with a pitch-perfect design (though it does have some serious shortcomings in the content department), and it’s given Apple (AAPL) better margins.

“Compared to the first-generation Apple TV, the new model offers a dramatically improved ratio of hardware cost to retail price,” iSuppli noted in its teardown analysis. “The initial version of the Apple TV appeared to be a near give-away or subsidized product for Apple, sold at prices that weren’t much more than the underlying hardware costs. With the second-generation version of the hardware, the Apple TV’s price is about 35 percent above its BOM and manufacturing cost.”

*The standard iSuppli caveats apply here. The company’s estimate accounts for hardware and manufacturing costs ONLY–R&D, software, licensing costs, etc. are not considered.

]]> http://allthingsd.com/20101006/apple-tv/feed/ 0 http://allthingsd.com/20100930/isuppli-on-chip-market-curb-your-enthusiasm/ http://allthingsd.com/20100930/isuppli-on-chip-market-curb-your-enthusiasm/#comments Thu, 30 Sep 2010 18:06:55 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=49762 With Intel and AMD both dialing back expectations for their third quarters, citing weaker than expected demand for consumer PCs, it was only a matter of time before market research outfits began trimming back theirs as well. And iSuppli did just that this morning, dropping its 2010 semiconductor industry revenue growth forecast to 32 percent from 35.1. “There has been a significant slowdown in the second half in consumer demand for some electronic devices, including PCs,” iSuppli Senior VP Dale Ford said in a statement. “Meanwhile, inventories have been building throughout the semiconductor supply chain. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter.”

Disappointing.

That said, 2010 chip sales are still expected to hit $302 billion, up from $228 billion in 2009, despite the reduced outlook. But knowing that hasn’t had much effect on semiconductor stocks, which are mostly trading lower today.

]]> http://allthingsd.com/20100930/isuppli-on-chip-market-curb-your-enthusiasm/feed/ 0 http://allthingsd.com/20100917/a-wireless-world-subscriptions-set-to-pass-five-billion/ http://allthingsd.com/20100917/a-wireless-world-subscriptions-set-to-pass-five-billion/#comments Fri, 17 Sep 2010 17:23:27 +0000 Voices http://voices.allthingsd.com/?p=29914 Global wireless subscriptions will breeze past another large-round-number milestone this month, according to research outfit iSuppli: An installed base of five billion devices. That’s the equivalent of almost three-quarters of the world’s population, but the regional penetration varies widely, from 50 percent across Africa and the Middle East to 157 percent in Western Europe, where many people have multiple phones and subscriptions.

]]> http://allthingsd.com/20100917/a-wireless-world-subscriptions-set-to-pass-five-billion/feed/ 1 http://allthingsd.com/20100824/dell-starts-selling-first-u-s-smartphone/ http://allthingsd.com/20100824/dell-starts-selling-first-u-s-smartphone/#comments Tue, 24 Aug 2010 19:39:20 +0000 Ian Sherr http://voices.allthingsd.com/?p=28673 Dell Inc. put its first U.S. smartphone on sale on Tuesday, making the computer maker the latest technology manufacturer to enter the competitive mobile handset market.

The Round Rock, Texas, company said its 3.5-inch touchscreen phone, dubbed the “Aero,” runs on Google Inc.’s (GOOG) Android operating system and is available for $99.99 with a new two-year contract from AT&T Inc. (T) and $299.99 without. It can be ordered via Dell’s (DELL) website.

The move comes as the manufacturers jockey for position in the increasingly competitive smartphone market ahead of the critical holiday shopping season.

Energized by the release of Apple Inc.’s (AAPL) iPhone in 2007, sales of smartphones have become increasingly popular and a driver of sales for many hardware makers. Global smartphone sales are expected to double to 506 million units within four years, industry tracker iSuppli said earlier this summer.

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]]> http://allthingsd.com/20100824/dell-starts-selling-first-u-s-smartphone/feed/ 0 http://allthingsd.com/20100817/lcd-tv-prices-take-a-surprising-upward-leap-in-july/ http://allthingsd.com/20100817/lcd-tv-prices-take-a-surprising-upward-leap-in-july/#comments Tue, 17 Aug 2010 20:38:49 +0000 Don Clark http://voices.allthingsd.com/?p=28409 Consumers have gotten used to a steady downward slide in prices of LCD TVs. And with the economy not exactly rosy, there would seem to be plenty of incentive for additional price cuts. But that’s not what happened in July, iSuppli says.

The research firm says the average U.S. retail price for LCD TVs that month jumped 7.2 percent from June–the highest increase in at least a year–after sequential declines the prior two months. The average price of $1,136 was up 2.8 percent from the year-earlier figure.

It’s not that consumers are clamoring for a new television, allowing manufacturers and retailers to raise prices on their inventory of TVs. Far from it.

“Demand has definitely slowed down,” says Riddhi Patel, director of television systems research at iSuppli. “Everybody is worried that they have not been able to move units like they would like.”

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]]> http://allthingsd.com/20100817/lcd-tv-prices-take-a-surprising-upward-leap-in-july/feed/ 0 http://allthingsd.com/20100726/new-tv-tech-could-be-boon-for-venture-backed-chip-companies/ http://allthingsd.com/20100726/new-tv-tech-could-be-boon-for-venture-backed-chip-companies/#comments Mon, 26 Jul 2010 15:21:33 +0000 Scott Denne http://voices.allthingsd.com/?p=27539 The move to new display technologies and demand for new applications are turning televisions into the next growth segment for chip companies, and venture-backed companies could benefit.

Annual sales of semiconductors into televisions will grow by $2.9 billion this year to $12.2 billion, according to a new report from iSuppli, a semiconductor research firm that expects that pace of growth to continue on through next year.

This growth is being driven by two trends: the falling price of liquid crystal display, or LCD, panels, and the demand for features that haven’t been part of television designs until recently.

Now that overall costs for LCD panels, which are in most televisions, are coming down, television makers are focusing on improving the performance of their devices, said Randy Lawson, an analyst with iSuppli. This in turn calls for a host of new components such as image processors, power management chips and light-emitting diodes, Lawson said.

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