Moto X Teardown Reveals that Made in USA Costs $5 Extra

By Marcus Yam
published

The cost of doing business in the United States is just a handful of extra dollars.

The Moto X smartphone is an interesting device not only because it's one of the first Google-influenced Android devices from Motorola, but also because it's made in the U.S. In a sea of consumer electronics that are made in Asia, having a domestically assembled is both notable and unusual.

A teardown analysis by research firm IHS revealed that manufacturing costs for the Moto X are around $12, which is $4 or $5 higher than comparable phones that are made in Asia. A fist full of dollars may not sound like much when talking about one device, but the cost is significant when multiplied by hundreds of thousands of phones.

The added cost of producing the Moto X in Texas, however, has enabled Motorola to offer a customization program where consumers can customize the color scheme of their devices without a significant impact on delivery time. Currently this service is only offered to AT&T customers.

The total cost to build the Moto X comes to an estimated $221, with the major costs being the main processor for $28 and the AMOLED display at $62.50.

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Marcus Yam
Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
Topics
Smartphones
28 Comments Comment from the forums
  • kawininjazx
    It cost $221 to make and costs hundreds more, just like iPhones. How come google can sell the Nexus 7 with such a low profit margin and phones are 2-3x profit?
    Reply
  • xtec
    Five dollars isn't that much and would not keep any one from buying this phone..except it will be triple that or more at retail. The middle men have to make their 300 to 400%.
    And by the way it wont cost Motorola any thing, unless they don't sell, because its all passed on to the customer.
    Reply
  • descalada
    11440104 said:
    It cost $221 to make and costs hundreds more, just like iPhones. How come google can sell the Nexus 7 with such a low profit margin and phones are 2-3x profit?

    Remember this is just the manufacturing cost. This doesn't take into account the cost of developing the phone's hardware, software integration, and the countless testing cycles to get to the finished product. There is a lot of investment and overhead just to get to this point. Moto and all other handset manufacturers need to recoup the costs of this investment. Think of it like movies. The cost of a single DVD is 20 cents or less, but you pay $20 and receive a movie that may cost hundreds of millions of dollars to make.
    Reply
  • -Fran-
    11440265 said:
    Remember this is just the manufacturing cost. This doesn't take into account the cost of developing the phone's hardware, software integration, and the countless testing cycles to get to the finished product. There is a lot of investment and overhead just to get to this point. Moto and all other handset manufacturers need to recoup the costs of this investment. Think of it like movies. The cost of a single DVD is 20 cents or less, but you pay $20 and receive a movie that may cost hundreds of millions of dollars to make.

    Well, Steve Jobs said it in its time and made clear what the challenges were to bring back the "production" part to the US of A.

    The first and more important part is workers willing to move in no time (overnight mostly) to keep manufacturing levels up to speed. And the technological part for facilities was the second issue he identified: they had factories ready for production in like 3 days, was it? China has been advancing in both points faster than the US of A, but it doesn't mean it will last forever. Besides, that's leaving the point of "21st century slavery" at bay.

    In short, the "cost" itself doesn't reflect if these issues are solved/overcome or not, but if Motorola is willing to do so, I'm pretty sure more will join when more plants are built and can compete with China (or Malaysia) in price and productivity.

    Cheers!
    Reply
  • yhikum
    The cost overhead is only a factor in investment.

    Justifying that you can get 300% profit out of it is what is troublesome.
    By this logic, technology benefit is secondary to profit, which is clearly goal of any investment.

    Yet, when we assume that future offers us ease of work or technological benefit, we forget that it is driven by profit. More correctly said, would be along lines of: profit does not drive technology, but rather produces secondary effect output which we consider benefit.

    Same can be observed in any company currently. So why claim that is positive development? Is this only acceptable way of dealing in current commerce? Answer yes would be considered without further thinking.
    Reply
  • Mathos
    Yeah, so it costs $5 more to assemble in the US.. See, but how much are they saving on not having to pay the importation taxes, and overseas shipping?
    Reply
  • the1kingbob
    This is a little bit misleading, as other comments have noted. There is a lot of overhead with this move. People pick over sea slaves because there are companies that take on the challenge of figuring out how to build the assembly factory. The money paid to them is used for this setup and maintenance while very little is passed onto the workers. Hell, even Apples USA machines are assembled in factories owned by Foxconn. Also as for the price, I am pretty the price is still high because this is a Motorola phone. All nexus devices drive very low margins; yesterday the nexus 4 dropped 100 bucks. It is now cheaper than a new nexus 7; that is pretty damn impressive.
    Reply
  • soo-nah-mee
    I would gladly and voluntarily pay 100% of the $5 premium for the opportunity to own an American made electronic device.
    Reply
  • segio526
    11440388 said:
    Yeah, so it costs $5 more to assemble in the US.. See, but how much are they saving on not having to pay the importation taxes, and overseas shipping?
    Actually, I think that's all part of the calculation
    Reply
  • inherendo
    All of you guys stating you want to pay what the phone costs, show me where you can buy a S4 or iphone for BoM.

    The figure in the article does not include anything besides the cost of the parts.
    Reply