IHS Markit’s tear down of Apple’s iPhone shows cost hike of $5 in manufacturing cost.

According to IHS Markit Ltd, Apple’s latest flagship the iPhone 7 has higher input costs than its predecessor, the iPhone 6S thanks to its bigger battery and higher storage capacity.

According to the business research provider, a hike of just $5 in manufacturing cost has translated to $36.89 more for the iPhone 7’s manufacturing price of $224.80. The same unsubsidized 32GB version of the phone is sold by Apple at $649.

On September 7, Apple released its latest flagship featuring higher resolution cameras and with no headphone jack.

According to IHS Markit’s teardown, although the iPhone 7’s bill of materials was “in line” with Samsung Electronics, since Apple’s brand has more appeal, the company can eke out higher margins.

“All other things being equal, Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past,” said Andrew Rassweiler, senior director of cost benchmarking services at IHS Markit.

IHS Markit has yet to perform a teardown analysis on the iPhone 7 Plus.

Last week, Apple had announced that its supplies of the iPhone 7 Plus have been exhausted. Similarly supplies of the iPhone 7, in jet black, have also sold out.

Although Apple has bet heavily on China, interest in its latest products have largely been muted since cheaper local brands have flooded the market.

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Tags: Top, HIS Markit, Apple, tear down, Bill of Materials, BOM, manufacturing cost, bigger battery, storage capacity,