First Chromebook Is Expensive To Make

Kurt Bakke in Business on June 13

The first Samsung Chromebooks are making their way to consumers much earlier than expected. Their high retail prices seem to be justified, given their high production cost.

Samsung's Chromebook

Researchers from IHS iSuppli are following up a previous teardown from iFix it and have come up with a production cost estimate. the company believes that Samsung may be investing about $322 in materials and $12 in manufacturing in its Chromebook for a total cost of about $334 out the door. The Samsung Chromebook will sell for $500 at retail, which suggests that there isn’t much margin left, if we consider shipping cost, marketing cost, R&D cost as well as retail margins. To make this work for Samsung, Chromebooks will have to sell in substantial numbers.

The big-ticket item in the Chromebook is the mainboard that carries Intel’s 45 nm, 1.66 GHz Atom N570 processor as well as the old and somewhat power-hungry 130 nm chipset (Intel, can we move on and drop this antiquated chipset?) Including an Infineon TPM, a TI battery charger, a clock generator, the SMSC fan controller, Intersil and TI regulators as well as the Realtek audio codec, the board costs more than $86, according to IHS iSuppli.

A problem of Atom processors has always been their high cost: While Intel is believed to manufacture each for a cost well below $5 per unit, the N570 has a stunning tray (1000-unit) price of $86. Even the cheapest Atom processor, the single-core Atom N450 sells for $64 – which is the same what Intel charges for a 45nm, 2.8 GHz (Core-based) Pentium desktop processor.

While Samsung quite obviously may receive a big discount from Intel, Intel will have to be much more aggressive in its processor pricing as other potential manufacturers may find a cheaper ARM processor much more appealing, especially, if they will soon offer four cores and impressive performance such as Nvidia’s Kal-El chip. Future Atom’s cannot have tray prices much more $15 to allow Intel to compete.

According to IHS iSuppli, Samsung pays about $58 for the 1280×800 pixel Chromebook display, $48 for the battery, $43 for the WWAN module, $40 for the enclosure, $28 for 16 GB SSD, $18 for peripherals and $10 for box contents such as the AC adapter.

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