Samsung Galaxy Note 3 costs $240 to build, display most expensive part

October 2, 2013

    Samsung Galaxy Note 3 jet black aa 31A recent teardown of the Samsung Galaxy Note 3 has estimated that it costs around $240 to build, which is about $20 more than the 3G version of the Samsung Galaxy Note 2. The extra costs are due to the better display, the faster processor and the increased amount of RAM.

    The successor to the Note 2 has a bigger display (full HD 5.7 inch SuperAMOLED), a faster processor (a quad-core 2.3 GHz Snapdragon 800) and an extra gigabyte of RAM. Samsung and Qualcomm are the major chip suppliers for the Note 3 with the processor, baseband chips, and power management integrated circuits coming from Qualcomm and the memory (both RAM and flash) being made by Samsung. Other notable silicon providers are Wacom, which provides the digitizer controller module, and Broadcom which supplies the NFC chip.

    galaxy-note-3-cost TechInsights

    Samsung chose to use a 5.7 inch display in the Note 3 which is 0.2 inches bigger across the diagonal than the Note 2, but unlike the Note 2, which had an RBG display, the new device uses a PenTile display like the Samsung Galaxy S4. There were some concerns about how a full HD PenTile display would perform as early PenTile displays suffered from a slight jaggedness around fine graphic elements such as text and icons. However it seems the these concerns where without foundation.

    It is thought that the Samsung Galaxy S4 costs around $214 to build while the Note 2 cost $219. So clearly the Note 3 is Samsung’s most expensive device but it also sells for more. The off contract price of the Galaxy S4 is around $640, the Note 2 was a little more expensive at around $650, but the Note 3 goes for $699 meaning that Samsung will make a nice profit from this device if the sales go according to projections.

    Recently Samsung revealed that it had sold over 38 million Galaxy Note devices (both Note and Note 2 sales combined) and it is thought that the bulk of those sales came from the Note 2. If the Note 3 manages to sell just as well it will be a very profitable smartphone for Samsung.

    Now Watch: Samsung Galaxy Note 3 Review

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    Comments

    • Groud Frank

      Mark that sucker up aye Samsung; just like Apple. I will not be getting this as there are much cheaper Chinese alternatives that suits my needs. I am done spending money on these crazy markups. Why must I pay 700 dollars for something whose real monetary value is 250? I know they have to make a profit but these OEMs are over doing it on the price.

      • dodz

        here in my country it costs $890, same as the iphone and I still see many people buy an iphone, talk about pricing

        • Daniel DS

          In Israel, brand new flagships usually cost just above 1000$ when they’re brand new :/

      • Valtheus

        I couldn’t agree more. Its pathetic how much money they charge you for their so called “flagship” devices. You can get 2 laptops these days for the price of one iPhone or Note 3 and guess what… you can do much more with a laptop.

        Thats why companies like Apple and Samsung have tens of billions of dollars in cash. We should ask ourselves why we chose to pay premium prices for cheap manufactured products… :-/

      • Gilles LeBlanc

        Well though I have yet to take over the familly company I understand this very well. I promise at the end of the day samsung is making more like 50$ a unit. It cost tons of money to R&D, to market and after market also to build even in asia. I can give you tons of examples where a 200 dollar item was to expensive for my parents to sell at a thousand… Its just a stupid way to calculate cost realy, I was suprised to see that.

        • NeedName

          actually Samsung and apple are doing very well on their phones (flagship phones). . . more like 40+% profit margin.

          $50 would be more like 10-15% and apple does NOT do such low margins.

          The key for them is numbers. R&D drops drastically when you sell over a million units of something. Not to mention 40 million units.

          Samsung believes they can keep their profit margin as high as apple’s because they are direct competitors and samsung is selling just as well as apple is.

          • Relaxasaurus

            How does R&D “drop dramatically” when you sell a certain amount? Do you even know what that stands for?

            Echoing Gilles, Samsung has to factor in manufacturing costs, hardware testing, legal costs, software development, QA, etc… and that’s on top of actual unit cost, marketing, and R&D.

            If the device was guaranteed to sell 100 million units the price would go down based on a return on volume, but it will sell much less. Not many people are into phablets yet compared to the standard smart phone.

            • NeedName

              seriously, not difficult to understand. the more units they sell, the more they make and the less impact the overall cost of everything else (R&D, engineers, marketing, etc) has on the device.

            • Joshua

              Not true. Those costs increase every year as they unveil a new smartphone every 4-6 months. research and development is always going to be a demanding cost in a technology company as technology advances so quickly. It makes no sense to say research and development will “drop dramatically”. Maybe for the device in question but they’re already spending money developing a new model for future release.

          • Gilles LeBlanc

            Perhaps on some models but then you loose money on other gambles and at the end of the day your left with 50 cents and a pissed off customer. Of course thats just an analogy withoughts getting into accountant stuff. What really matters is what you gross as you pointed out. Calculating unit cost is BS batshit crazy stuff.

            • NeedName

              yes, they do lose money on some models. . . or break even. However, all we have to do is look at Samsung’s record breaking profits over the last year and where those profits came from to know that they are making a killing off smartphones. It’s no secret.

    • Amine Elouakil

      750$ :)

      • Georges

        Amin where are bro!
        You look arab and I am too!

        • Amine Elouakil

          sup*?

          • David Heyden

            My note 3 cost 703.00 usd I am on tmobile and can get another phone in 6 months so with the zero down deal it will cost me 30 dollars a month for 6 months then I get another phone. In my opinion paying 180 dollars for 6 months use is very fair.

            • Amine Elouakil

              Good for you then but it’s still a very expensive locked device for anyone else, including me who most of the times and not all of the times gets the latest in greatest device…

    • Wuchko

      Tax, customs, Network providers and local shops. Everyone needs to make money from it. That’s why costs so much

    • bah

      990$

    • hzd

      And there’s the reason to not buy from samsung . . . . if its marked up at 200bucks less it would not be to bad but the current price is scandals ! Off contract buyers are defiantly mugged off.

      These things should be more public so customers can see how much company’s charge for their fancy software onto of the production and parts costs.

      The nexus line looks so much more appealing now to potential customers.

      All that software that Samsung adds to devices is not 270dollars worth.

      Maybe this kind of press will drive prices down or atleast show that many other devices with less fancy software are better more affordable options now the SIM only contracts are on the rise.

      I already steer clear of apple / Sony and now Samsung join my list over overpriced devices aimed at mugging off the general public.

      Bring on the nexus 10 reboot and nexus 5 to put shame to company’s like these and offer devices at an more affordable price with just as good If not better specs.

      Yes a company has to make money but this just shows their greed, hopefully others will follow in googles / Amazon’s footsteps.

      • simpleas

        lol ifags… gotta love em

    • Jack

      most expensive part in the screen but the screen is the most part that sucks about it you can’t see anything out side. i still like LCD3 million times better

      • Skander

        Read displaymate’s professional review.
        It’s the brightest display ever tested (both oled and lcd).

        • Amine Elouakil

          then it get burned out in a few days like any SAMOLED Display before it. if only they kept making SAMOLED+ display it would have been nice

          • Skander

            That’s the whole point of PenTile and the diamond shape, blue pixels are larger to significantly reduce burn in.
            My S4 (about 7 months old now) still shows no burn in, yes it will (probably) appear after a year more or two.

            SAMOLED displays are improving waay too quickly for any display technology, so you should never compare them to older iterations.

            • Amine Elouakil

              7 months? I’m sure that the S4 came out the 26 April of 2013 (which is 5 months ago) and didn’t hit many markets intel a couple of months passed.

              As for S4 burned screens a simple googling it would show you that it is still actual.

              The SAMOLED+ is more fragile, than the current SAMOLED but that’s mainly due to the fact, that Samsung didn’t invest as much in it R&D and stoped at one generation due to the manufacturing costs (PROFIT PROFIT PROFIT)

              Once the Note 3 hits local store I’ll give it a try, but if it just a slight enhancement over the S4 screen then it’s far from being better than SLCD3 screen (although it looks nice and flashy)

            • Skander

              S3*

            • Skander

              Woah there, if Samsung cared about the display related profits, they can easily rely on LCD and save tons, and tons, and tons of money.
              As I said, AMOLED displays are improving quickly, and that’s only thanks to the huge amounts of money invested, they didn’t call the Note 2′s display “plus” even though it’s a non-pentile, they are doing what the technology can do for the time being, and it’s IMO superior than any competitor display in nearly everything.

            • Amine Elouakil

              No because they want to impose the technology like Sony did with the Bluray vs HDDVD as a standard, and so far they aren’t succeeding, and no going the LCD route is not option right now for them that would be dumping the billions they invested in the SAMOLED Technology (while I believe Oled technology is the future, the technology in it self is still in it infancy and far from beating the revolution that is hapening in the LCD screen world) not to mention that a full HD Pentile SAMOLED is cheaper to build than it SLCD counterpart

              While the Note 2 is not the usual RGBG PenTile it’s still not a full RGB screen. as for the AMOLED Technology improving quickly that is a fact, but the competition aren’t just waiting and they are moving as quickly if not quicker than what Samsung does.

              And I’m sorry moving from SAMOLED + to the normal AMOLED is a downgrade, I understand that they needed to build a higher resolution screen for the S3 and Note1 but they could kept the developement for the technology and making it for next (current S4 Note3) generation

            • Skander

              You have to read the display mate review again.
              AMOLED displays are still far more expensive and difficult to produce than LCD displays.

              They’re not imposing a technology, they’re imposing the fast evolution of a technology.

            • Amine Elouakil

              DisplayMate and other references disagree with you, anything PenTile is much cheaper to make than anything full RGB especially at HD resolution and higher.

              No they want to impose a certain technology because Samsung it’s the biggest producer of smartphone AMOLED displays in the world but so far not much adoption elsewhere (Samsung is well known for it’s bad competitive practices aka Nexus One and HTC Desire fiasco)

      • simpleas

        ROOOOFL too bad it has the brightest display of any phone.

    • Nicktrance

      It’s really disappointing to see how many people have no ideawhat BOM cost is yet still comment about a subject they completely don’t understand. That’s not to say Samsung isn’t aiming to take your money justlike every other company, but trust me the profits are not even close to what most comments seem to suggest.

      • simpleas

        these are just kids here, did you expect a room full of mbas?

        • Groud Frank

          No MBA can replace the value of commonsense. There is a narrative here: take advantage of our brand, mark up the product price,have consumers throw their money at it, make it irrelevant 10 months after by announcing a new version of that product by adding 1 or S to the previous, repeat cycle. If Apple or Samsung had to make a device exactly like the Xiaomi Mi3 how do you think it would sell it for? Certainly not the 340 dollar price tag on it now…

    • zaid

      I would say this post is pathetic in itself. If anything then the author should have explained how much Samsung make profit for this phone. People here do not understand how marketing works and starts commenting like samsung makes 500 $ profot per product.

      • NeedName

        well, considering apple and samsung make nearly *ALL* the profit in the smartphone market (record profits). . . the comments aren’t so far off.

    • abazigal

      I personally find BOM charts like this very misleading and dangerous.

      It may lead people to believe that phones ought to be priced at near cost (like what Google is doing with their Nexus devices), without thinking that Google has a different business model, and can afford to subsidise their products because they expect to earn it back from the consumer in the long run in the form of advertising revenue.

      It also does not account all the other costs involved in manufacturing the phones, such as designing the OS, maintaining in-house services, R&D of new features, warranty, shipping etc.

      It may also lead companies to cut corners in an attempt to reduce margins (leading to scenarios like the shoddy build quality of the 2012 Nexus7 tablets by Asus).

      What people should be focusing on is whether the end product properly meets their needs or not, and not which earns their OEM the least margins.

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