Fun with Data – Apple Watch 6 BOM
The Apple Watch 6 Series, released last September, costs anywhere from $400 to $900 depending on the case material, the case finish, and the band, but the cost to produce the watch itself, along with the assembly, testing, and packaging are a bit less. Given the three case material choices, the nine case finish choices, and the six band types, along with special editions from Nike (NKE) and Hermes (RMS.FP), there are almost an infinite number of possible combinations to evaluate, but the folks at Counterpoint have done their best to breakdown what would be an almost generic Apple Watch 6 to give an idea of the BOM.
The most costly component category is processor/memory, which includes Apple’s S6 SIP (System in Package), Apple’s W3 wireless chip, which handles Wi-Fi, Bluetooth, and cellular, and SK Hynix’s (000660.KS) RAM and on-board memory. The display, an LTPO based 1.78” OLED assumedly produced by LG Display (LPL) and is covered with Apple’s ION-X glass, which we believe is produced by Corning (GLW), but potentially strengthened by an outside source. Apple also provides the option for a sapphire cover glass model, but in this case the BOM is for ION-X rather than the more expensive sapphire.
The watch body also has options but in this study the body is a combination of aluminum and stainless steel, while the back is ceramic and sapphire. The casing itself is the 2nd most costly category, which in this device is more costly than the display, which in most CE devices is the most expensive component category. Since Apple promotes the sensor capabilities of the Apple Watch 6, which include the usual accelerometers and gyroscopes (movement and fall detection), barometers, altimeters, and compass (location?), the sensor category is substantial, and also includes well-promoted blood oxygen and heart-rate sensors. The UWB (Ultra-wide Band) sensor, the key to Apple’s location tracking system however, is not part of the sensor category and adds to the processor/memory cost.
All in, the BOM for such a generic Apple Watch 6 is $136, leaving Apple and retailers considerable profit margin. Given Apple’s dominant share (33.5% in 1Q ’21) and the strong y/y growth in the category (35% t/t), the higher cost of miniaturizing Apple Watch components seems to have little effect on profitability. As we get closer to the usual Apple Watch release date (typically in September) there have been rumors of both additional sensors (Blood Glucose and or blood pressure) and extended battery life, and the potential for a micro-LED display, which has been rumored since late 2018, but regardless of the features, we expect Apple will maintain a similar BOM or at least margin, regardless of the feature set.
The most costly component category is processor/memory, which includes Apple’s S6 SIP (System in Package), Apple’s W3 wireless chip, which handles Wi-Fi, Bluetooth, and cellular, and SK Hynix’s (000660.KS) RAM and on-board memory. The display, an LTPO based 1.78” OLED assumedly produced by LG Display (LPL) and is covered with Apple’s ION-X glass, which we believe is produced by Corning (GLW), but potentially strengthened by an outside source. Apple also provides the option for a sapphire cover glass model, but in this case the BOM is for ION-X rather than the more expensive sapphire.
The watch body also has options but in this study the body is a combination of aluminum and stainless steel, while the back is ceramic and sapphire. The casing itself is the 2nd most costly category, which in this device is more costly than the display, which in most CE devices is the most expensive component category. Since Apple promotes the sensor capabilities of the Apple Watch 6, which include the usual accelerometers and gyroscopes (movement and fall detection), barometers, altimeters, and compass (location?), the sensor category is substantial, and also includes well-promoted blood oxygen and heart-rate sensors. The UWB (Ultra-wide Band) sensor, the key to Apple’s location tracking system however, is not part of the sensor category and adds to the processor/memory cost.
All in, the BOM for such a generic Apple Watch 6 is $136, leaving Apple and retailers considerable profit margin. Given Apple’s dominant share (33.5% in 1Q ’21) and the strong y/y growth in the category (35% t/t), the higher cost of miniaturizing Apple Watch components seems to have little effect on profitability. As we get closer to the usual Apple Watch release date (typically in September) there have been rumors of both additional sensors (Blood Glucose and or blood pressure) and extended battery life, and the potential for a micro-LED display, which has been rumored since late 2018, but regardless of the features, we expect Apple will maintain a similar BOM or at least margin, regardless of the feature set.
Apple Watch 6 - BOM - Source: Counterpoint
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