Motorola may have “overturned the truism” that it is cheaper to produce products in Asia than North America with its US-made Moto X smartphone, according to a study by IHS.
The research company said that the bill of materials (BOM) and manufacturing expense for the Moto X is $226, putting it “roughly in the middle of the combined BOM and manufacturing costs of the leading smartphone models, Apple’s iPhone and Samsung’s Galaxy S4”.
IHS said that the 16GB Galaxy S4 has a BOM and manufacturing cost of $237, while the 16GB iPhone 5 is cheaper at $207. The manufacturing expense of the Moto X is $3.50 to $4.00 more than the Apple and Samsung devices.
Troubled smartphone maker Motorola has trumpeted the US manufacturer as one of the differentiators of Moto X, which will at least initially squarely target this market.
“In spite of its ‘Made in the USA’ label, overall costs are still competitive with similar smartphones. Our initial estimate suggests the additional costs of onshoring the Moto X are relatively low,” said Andrew Rassweiler, senior director of cost benchmarking services for IHS.
The company also noted that retail and contract pricing indicates that Motorola receives operator subsidies of “slightly more than $300 per handset” when a Moto X is purchased on contract, compared with more than $400 for the iPhone or Galaxy S4.
“Motorola is definitely vying to become the lower-cost alternative to Apple and Samsung for the wireless carrier partners,” said Wayne Lam, senior analyst for wireless communications at IHS.
IHS said that the Moto X uses components that are already shipping in high volumes, enabling Motorola to keep its costs down. The device uses a number of components from Qualcomm, including an application processor similar to that used in HTC’s One X, the BlackBerry Z10, and North American version of Samsung’s Galaxy S III.
The company also said that the “X8 Mobile Computing System” promoted by Motorola, which has been perceived as “a system-on-chip (SoC) solution from Motorola featuring eight cores”, is “not an SoC, and not a Motorola chip”.
Instead, it sees the eight cores split across “at least two” integrated circuits, including components from Qualcomm and TI.