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.

Apple’s second-generation iPad will likely have a front-facing camera and a rear-facing camera as well, both to be supplied by digital-imaging outfit OmniVision. That’s the word from Detwiler Fenton, which claims the former will be VGA and the latter a 5MP camera based on OmniVision’s CMOS sensor.

Seems a reasonable prediction–after all, the next iteration of the iPad is expected to support the company’s FaceTime video chat technology, and OmniVision is responsible for the camera in the iPhone 4.

The company, which makes image sensors used in camera phones, yesterday posted slightly better-than-expected revenue for its fiscal first quarter ended July, but weaker-than-expected profits, along with disappointing fiscal Q2 guidance. The stock traded lower in after-hours dealings last night, but today the shares have staged a robust rally.

That’s a little surprising. Many analysts sharply reduced estimates on the company today, chopping their price targets in the process. But with the stock down 40 percent since late March, investors may have concluded that the stock has suffered and enough, and had dropped about as low as it was going to go.

Read the rest of this post

He notes that of the 19 companies he follows, 14 have posted gains of 5% to 25% since he upgraded the sector on April 4. (Just two of those stocks–Qimonda (QI) and Omnivision (OVTI)–have declined in the subsequent weeks.) And now, he says, they are due for a four- to six-week pause.

Read the rest of this post