Samsung Galaxy S8 Material Costs Much Higher Than Predecessors

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Samsung Galaxy S8 Material Costs Much Higher Than Predecessors
Highlights
  • Total cost of Galaxy S8 estimated to be more than that of Galaxy S7 Edge
  • IHS Markit says increase in BOM cost is clear reflection of market trend
  • Samsung Galaxy S8 has been priced in India at Rs. 57,900

While early reviews for Samsung Galaxy S8 and Galaxy S8+ have mostly been positive, it turns out that the South Korean company had to go the extra mile to make sure its latest flagships are capable of competing with best hardware around (and will be around in coming months). According to a latest report by analytics and solutions company IHS Markit, Galaxy S8 comes with a bill of materials (BOM) cost that is much higher than it was for previous versions of the company's smartphones.

As per the IHS Markit report, the 64GB inbuilt storage variant of Samsung Galaxy S8 has a BOM - bill of materials aka components - cost of $301.60 (roughly Rs. 19,400). Further, after adding $5.90 (roughly Rs. 380) in basic manufacturing costs the total cost of manufacturing device climbs up to $307.50 (roughly Rs. 19,800). The Galaxy S8 is retailing in the US at $750, while the India price is set at Rs. 57,900.

"The preliminary estimated total at this point is $43.34 (roughly Rs. 2,800) higher than that of the Galaxy S7 previously performed by IHS Markit, and is $36.29 (roughly Rs. 2,300) higher than the total build cost of the Galaxy S7 Edge, considered a better comparison to the Galaxy S8," IHS Markit said in its release. That means the Galaxy S8 costs roughly 20 percent more than its predecessor. The company says it has not performed a teardown analysis on the larger Galaxy S8+ yet, but it's likely to be higher than the Galaxy S8.

Infographic: Samsung's Galaxy S8 Is Expensive to Build | Statista

Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit, says that the increased BOM cost of Samsung Galaxy S8 is a clear reflection of the trend where smartphone makers including Apple and Samsung are trying to add hardware features to distinguish their product from rest in what appears to be an "arms race."

"While there are new non-hardware features in the Galaxy S8, such as a virtual assistant called Bixby, from a teardown perspective the hardware in the Galaxy S8 and that of the forthcoming new iPhone is expected to be very similar," Rassweiler added.

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