New Apple iPhone costs $179 to produce - iSuppli

SAN FRANCISCO (Reuters) - Apple Inc's new entry-level iPhone model costs $179 in materials and manufacturing expense, according to a teardown analysis on Wednesday by research group iSuppli.

The 16-gigabyte version of the new iPhone 3GS carries a bill of materials of $172.46 and costs $6.50 to make, iSuppli estimated.

The phone retails for $199, although it is heavily subsidized by exclusive U.S. carrier AT&T Inc with the purchase of a service plan.

Last year, iSuppli estimated the materials and manufacturing cost for the entry-level, second-generation 3G iPhone at $174.33.

ISuppli analyst Andrew Rassweiler said in a statement the iPhone 3GS is similar to the 3G from a component and design perspective.

"By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost."

The new iPhone keeps Samsung's applications processor, and features flash memory from Toshiba Corp.

It also uses chips from Broadcom Corp, Infineon Technologies AG, STMicroelectronics and TriQuint Semiconductor.

The iPhone 3GS went on sale last Friday and sold more than 1 million units in the first three days of launch, Apple has said.