First US-made smartphone just as cheap to produce

PUBLISHED : Thursday, 29 August, 2013, 11:10am
UPDATED : Thursday, 29 August, 2013, 11:10am

Motorola’s new Moto X phone doesn’t cost more to make simply because it’s assembled in Texas, research firm IHS said Wednesday.

The Moto X is the first smartphone to carry the “Made in the USA.” designation. Labour costs are higher in the US compared with Asian factories, where phones are typically made. But IHS said the Moto X is about 5 per cent cheaper to make than Samsung Electronic Co.’s flagship Galaxy S4 phone. The firm said the Moto X’s overall production cost is just 9 per cent more than that of Apple’s iPhone 5.

The findings come as little surprise, as the labour cost of a phone is just a small part of its production cost. IHS estimates that labour and other assembly costs Motorola US$12 per phone for the Moto X, bringing the production cost to US$226. That compares with US$207 for the iPhone 5 and US$237 for the Galaxy S4. IHS said Motorola is able to keep the cost of parts low by using standard components that don’t break much new ground.

By assembling the phone in Fort Worth, Texas, Motorola is able to let customers order custom designs online for delivery within four days. Standard black or white models are available immediately at retail stores.

“With the Moto X, Motorola is reaping the public-relations and customization upsides of producing a smartphone in the United States, while maintaining competitive hardware costs,” said Andrew Rassweiler, senior director for cost benchmarking services at IHS.

IHS said the estimated US$12 for assembly is about US$3.50 to US$4 more than other leading phones.

“Our initial estimate suggests the additional costs of onshoring the Moto X are relatively low,” IHS said.

The phone went on sale last Friday, starting with AT&T. It’s coming to other carriers, including Verizon this week. The Moto X’s price is about $200 with a two-year service agreement.

The Moto X is Motorola’s first phone designed from the start under its new owner, Google Inc. The Internet search company bought Motorola Mobility for US$12.4 billion last year.