Teardown Reveals Google’s Moto X Costs $221 to Build

As the first smartphone to be completely designed since Google’s acquisition of Motorola Mobility, there are a lot of expectations riding on the Moto X.

The phone, now considered the flagship of the Motorola lineup, is getting noticed for being different. For one thing, customers can customize the phone with colored casings to suit their tastes. It is also fairly advanced, designed to constantly listen for voice commands and change its behavior in different situations, like when the user is driving in a car.

And while it might seem to have a lot of the latest and greatest technology under the hood, it doesn’t. A teardown analysis by market research firm IHS has found that Moto X uses an applications processor from Qualcomm that is about a year old, combined with two chips from Texas Instruments, to provide some of its most important features.

And unlike most other phones, this one is assembled by Motorola at a plant in Texas, not in China or Taiwan. This boosts the manufacturing costs somewhat, but also allows for the custom colored shells.

“What Google and Motorola are trying to do is not play the game of ‘bigger is better’ that everyone else is playing,” said IHS analyst Wayne Lam. “They are looking for ways to differentiate themselves from the pack and push the user experience in a new direction.”

IHS estimates that the components used to build the phone cost $209. Manufacturing costs add another $12 per unit, which is about $4 or $5 higher than the cost to manufacture most phones in Asia. “Motorola is paying a premium for a made-in-America phone, but it’s also giving them the ability to do the customization work easily.”

Kristine Mulford, a Motorola spokeswoman, declined to comment on IHS’s findings.

The phone is selling directly from Motorola for $579 without a contract, or $199 from most wireless carriers in the U.S. with a two-year contract.

The main chip inside the phone is a Qualcomm Snapdragon S4, which IHS estimates costs $28. That chip has been combined with two chips from Texas Instruments that handle gestures and listen for spoken commands from the user, which cost between $4 and $5 together. “Motorola has put together a novel combination of electronics and software, and has done it in a very power-efficient way,” Lam said. Motorola refers to the combination of chips as its Motorola X8.

South Korea’s Samsung made the 4.65-inch display, which, between the display and the chips to run it, added about $62.50 to the component cost. Qualcomm provided at least three different chips to handle Wi-Fi, Bluetooth and connections to the wireless phone networks. It also provided power management and audio chips. Out of the $209 in component costs, nearly $43, or more than 20 percent, is sourced to Qualcomm, according to IHS.

Other chip suppliers include Omnivision, which provided a camera chip; Skyworks, which provided a wireless chip; STMicroelectronics, which made the accelerometer and gyroscope; and Wolfson Microelectronics, which made the microphones.

The teardown unit of IHS — which used to be known as iSuppli — digs into phones and other electronics to give its clients a competitive look at the components being used. It also estimates what those components cost in order to come up with what’s known in the industry as a “bill of materials” estimate. In recent months the firm has conducted teardown studies of a low-end phone from Nokia, the Samsung Galaxy S4 and a handful of tablets, including Apple’s iPad mini and Amazon’s Kindle Fire.

In interviews with AllThingsD, Dennis Woodside, the head of Motorola, has said that the Moto X indicates the direction that Google would like to take its hardware division going forward.