PS4 cost $381 to build - Report

Teardown analysis from research firm IHS reveals combined cost of components used to make next-generation system.

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Every PlayStation 4 unit costs Sony $381 to build, just $18 under the system's $399 price point, a new teardown analysis from research firm IHS has revealed. The report will be revealed later today, but AllThingsD was able to get a look at the data ahead of time.

The gross margin for the PS4 is substantially better, for Sony, than the numbers for the PlayStation 3 when it was first released in 2006. An IHS analysis back then found that it cost about $805 to build the $599 PS3. Manufacturing costs would later come down as would the retail price.

Chips make up more than half of the PS4's manufacturing cost, the IHS teardown report found. This includes an unusually large AMD processor for $100 and $88 for 16 individual memory chips.

“This chip is just gigantic,” IHS analyst Andrew Rassweiler said, noting its size is 350 square millimeters. “It’s almost three times as big as the next biggest chip we’ve seen.” He explained that bigger isn't always better, as chips with larger surfaces areas have a higher likelihood of manufacturing defects.

The PS4 also includes a Seagate hard drive ($37), wireless chips from Marvell and Skyworks, and an optical drive that costs Sony about $28, the IHS report found. The PS4's DualShock 4 controller costs around $18 to build, the report concluded. It includes Bluetooth chips from Qualcomm, an audio chip from Wolfson Microelectronics, and a motion sensor chip from Bosch. The PS4 ships with one controller, while additional units can be purchased for $60.

Rassweiler said because the PS4 manufacturing cost ($381) and sale price ($399) are so close, it is very unlikely that Sony is making a genuine profit on the console, instead leaning on games and accessories to boost its bottom line.

“It looks like once again, when it comes to profits, it’s all about the game titles,” Rassweiler said.

The PS4 was released in North America last Friday, November 15. The system sold 1 million units in 24 hours and will be released in Europe on November 29.

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