Judging from parts alone, Samsung's upcoming Galaxy Note 4 is the most expensive smartphone Samsung has ever made, according to a teardown conducted by Tech Insights. The new smartphone with a huge 5.7-inch screen costs $260 for parts and assembly, which is more than the cost of parts for the iPhone 6 and 6 Plus.
Keep in mind that teardown costs do not take into account other expenses associated with consumer technology like research and development, marketing costs, packaging, distribution, licensing, app development and software support, among other things. In 2013, Samsung spent $10.4 billion on research and development alone.
But the high price for Galaxy Note 4 parts shows how costly it is to compete in the high-end smartphone market, especially as screen sizes grow. Samsung has introduced a new high resolution QHD (1440x2560) display accounts for $66.50 of the total production cost.
The expense of manufacturing the Galaxy Note 4 comes as Samsung warned that profits are down 60 percent due to heightened competition from domestic smartphone makers in China and India.
Apple's iPhones aren't too far behind the Note. The iPhone 6 costs $227 for parts and assembly, while the iPhone 6 Plus costs $242, according to Tech Insights' Teardown.com. Estimates from IHS indicate that parts and assembly costs for the iPhone 6 are between $200 to $247, while the costs for the iPhone 6 Plus are between $216 $263, accounting for different storage sizes.
On average, the smartphone will sell for $299.99 with a two-year contract on most mobile carriers in the U.S., but each carrier has its own retail price for the Galaxy Note 4. The device will cost $699.99 on Verizon, $720 on Sprint, $749.76 on T-Mobile and $825.99 on AT&T. The iPhone 6 Plus sells for $299.99 with a two-year contract and for about $749.99 retail on most carriers.
After the screen, the next most expensive component on the Samsung Galaxy Note 4 is the processor, which costs $40.50. The device’s 16-megapixel main camera module costs $25.50. Most other Galaxy Note 4 components are less than $20, including the device’s connectivity modules, which include cellular, Wi-Fi and Bluetooth, which costs $12.50.
Samsung will be facing some staunch competition against Apple Inc. with the Galaxy Note 4 available in select locations like Korea and China; the device will launch in the U.S. on Oct. 17, the same day Apple will launch the iPhone 6 and 6 Plus in China. The new iPhones have been available to most global markets since Sept. 19 and have already exceeded 10 million units sold. Meanwhile, Samsung says it is aiming to ship 15 million Galaxy Note 4 units within its first month of availability, more than it has ever shipped of any major smartphone.