The bill of materials always seems to surprise people for being so low compared to the retail price, but charging 3x the price of your BOM at retail is really pretty standard, and 2x is probably the minimum you’ll see from most manufacturers, but that’s probably what they’re charging their distributors, which in the smartphone OEM’s case are the carriers.
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Probably the only exception is Apple, which tends to charge carriers the full retail price for their phone, which in turn leads carriers to unfairly put more pressure on the price on Android OEM’s to recoup some of that money. But the bottom line is, it’s very rare to see a device that doesn’t cost at least 2x its bill of materials, unless the company behind it is subsidizing it somehow.
Now that we’ve cleared this up, let’s see what really going into this bill of materials for the Galaxy Note 3, which is a little higher than the ~$200 BOM other companies pay in components for their flagship smartphones.
As we can see from the table above, some of the components have gotten cheaper since being used in the Galaxy S4, while others have gotten more expensive. The camera, even though it’s the same as the one in S4, has gotten 30 percent cheaper, most likely because it’s being used half a year later, and because Samsung has seen economies of scale by using it in the high-volume Galaxy S4. The same is true about some other components, too.
The display and storage seem to have gotten more expensive, though, most likely because the panel of the Note 3 is bigger than in S4, and they probably used faster NAND flash in the Note 3. It seems the display is also the most expensive component, at least for Samsung, since they’re using AMOLED displays, which tend to be more expensive than their LCD counterparts. The processor is also more expensive. It’s a higher clocked Exynos 5420, with a new Mali T628 GPU.
Even though its BOM is a little higher than the Galaxy S4, and even the Galaxy Note 2, Samsung is going to sell the Note 3 at a higher price anyway, so I have no doubt the Note 3 is still incredibly profitable for them, even after paying all the other costs with salaries, marketing and so on.