iPhone build cost pegged at $179

Apple's iPhone 3GS has a manufacturing cost of $178.09 (£109.23), according to analyst estimates.

A recent teardown analysis of the new iPhone handset found that the hardware components in the 16GB version of the device carried an estimated cost of $172.46. The cost of manufacturing each iPhone was pegged at about $6.50 per unit.

In the US, the 16MB iPhone 3GS retails at $199 with a two-year contract with exclusive carrier AT&T. Users who do not sign up for the contract must pay $399. In the UK, exclusive carrier O2 is offering the 16GB model for £184.98 with a contract and £440.40 without a contract.

The higher prices being charged for the phone without a contract could reveal how carriers expect to make a profit from the device.

iSuppli principal teardown analyst Andrew Rassweiler noted that Apple was likely receiving a higher price from the developers than what is being charged for the device with a service contract.

"This is slightly higher than iSuppli's estimate of $174.33 for the original 8GB iPhone 3G based on pricing in July 2008," Rassweiler said of the latest estimate.

"Although the retail price of the 16GB iPhone 3GS is $199, the same as for the 8GB version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidising the upfront cost of a mobile phone and making a profit on subscriptions."