USA: Apple Inc.’s second-generation iPhone is expected to carry an initial hardware Bill Of Materials (BOM) and manufacturing cost of $173, according to a preliminary “virtual teardown” conducted by iSuppli Corp.

On June 9, Apple CEO Steve Jobs announced the release of the much-anticipated new iPhone. The new version will be available starting July 11 in 22 different nations, including the United States. In advance of the iPhone release, iSuppli has performed a virtual teardown, using insights from our analysis staff to develop estimates of iPhone content, suppliers and costs. The analysis team consisted of iSuppli’s leading experts in the areas of teardown analysis, semiconductors, displays, mobile handsets, consumer electronics and wireless infrastructure.

iSuppli had planned to withhold any analysis of iPhone content and costs until it had conducted an actual physical teardown of the product. However, due to strong popular demand for information on iPhone costs and pricing, iSuppli has decided to release a preliminary analysis to the public.

Once the 3G iPhone becomes available, iSuppli will perform an actual, detailed teardown of the new iPhone’s components and cost structure.

“At a hardware BOM and manufacturing cost of $173, the new iPhone is significantly less expensive to produce than the first-generation product, despite major improvements in the product’s functionality and unique usability, due to the addition of 3G communications,” said Dr. Jagdish Rebello, director and principal analyst for iSuppli.

“The original 8Gbyte iPhone carried a cost of $226 after component price reductions, giving the new product a 23 percent hardware cost reduction due to component price declines.”

The figure presents iSuppli’s preliminary virtual teardown estimate of the 8Gbyte 3G iPhone’s costs. The figure doesn't include other costs, including software development, shipping and distribution, packaging, and miscellaneous accessories included with each phone.